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.

Nigeria’s Underperforming In Oil, Gas Sector Due To Insecurity – Lokpobiri

Minister of State for Petroleum Resources (Oil), Mr Heineken Lokpobiri, has said that the challenge of insecurity in the Niger Delta was responsible for the underperformance of the petroleum sector. The Minister, who said this in a meeting with the Abuja Chapter of the Energy Correspondent Association Friday in Abuja, added that it was also affecting Nigeria’s oil production output.   While noting that the issue was making it difficult for the country to meet its OPEC production quota, Lokpobiri said the government was working to address the drawback. He was hopeful that by the end of 2023, the country would increase its oil production to about 2 million barrels per day. Due to massive crude oil theft and pipeline vandalisation, Nigeria’s oil production presently hovers between 1.3-1.4 million barrels per day. “My sole agenda is to increase production. Once we increase production we will get more revenue for the country. You know Nigeria is still more dependent on oil. “Though the non-oil sector is also supporting the economy, a substantial part of our forex comes from oil. “The reason why we are underperforming is because of insecurity and we are gradually tackling those problems. “So, my ambition is to see how I can lead the sector to increase production so that we can get more revenue to deal with the fund and strategic rationale projects in the country. “I get the reports from relevant authorities. Today, we are doing about 1.4 million barrels of crude. So, we are steadily increasing but our target is to see how we can get to two million barrels,” he said. Lokpobiri urged the industry players to join hands together to find a permanent solution to the issue. He said the federal government was discussing with International Oil Companies and local producers to find a lasting solution to the insecurity challenge. He said the engagement was already yielding positive results. “We have identified where the problem is, and where we are getting the shortfall and we are already engaging them within the next few weeks, we will be able to give you how far we have gone in that direction. In an earlier remark, President of the association, Mr Victor Nnodim, assured the minister of the association’s readiness to partner with him as he sought to fulfill his agenda of ramping up crude oil production and delivering a better petroleum industry for the country. “We will support you to achieve your mandate,” he said.

No Plan To Increase Petrol Pump Price –NNPCL

The Nigeria National Petroleum Company Limited (NNPCL) has said it has no plans of increasing the pump price of petrol. In a statement posted on its verified X handle, and signed by the company’s Retail Management, it urged Nigerians to ignore speculations about a possible increase. NNPC Limited GCEO, Mele Kyari, had repeatedly stressed that the company would not increase the price of petrol from its present N617 per litre. “Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our PMS pump prices as widely speculated. “Please buy the best-quality products at the most affordable prices at our NNPC Retail Stations nationwide,” the statement read.

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.