Two weeks after the pipeline fire at Arepo in which 30 persons tragically lost their lives, there has been another explosion in the same area. The pipeline belonging to the Nigerian National Petroleum Corporation (NNPC) caught fire and exploded at Arepo village in Obafemi Owode Local Government Area of Ogun State.

There was a pipeline fire in the area in August 2012, when vandals ruptured the pipeline, which carries crucial petroleum products to the West, in order to siphon off petrol. Following that incident, two of the NNPC engineers sent to assess the damage were killed by vandals and the pipeline remained unrepaired for several months until NNPC could be sure that the safety of its personnel could be guaranteed. As a result NNPC had to resort to road haulage for the transportation of petroleum products. This exacerbated the fuel crisis that pervaded the country through most of the latter half of last year. The latest incident is the third in six months.

Visiting the scene of the tragedy, the Ogun State Governor, Senator Ibikunle Amosun, berated the security facilities in place in the area, laying the blame on NNPC. He accused the national oil company of "a failure of governance" in not ensuring adequate security for the pipeline.

The accusation was denied by the Acting Group General Manager, Group Public Affairs Division of the NNPC, Ms. Tumini Green who confirmed the break in System 2B pipeline at the notorious Arepo axis in the Obafemi/Owode Local Government Area of Ogun State. 

Commenting on the incessant vandalisation, she said: "It is so sad that vandals and other criminals will not stop breaking into our pipelines. As a Corporation, we are determined to ensure unimpeded flow of petroleum products no matter the odds.''  

In another development, the Inspector General of Police's Special Task Force on Anti-Pipeline Vandalism has arrested two Indian nationals and three other suspects in connection with the latest incident. The task force arrested the suspects in Osogbo, Osun State, shortly after the Indians took delivery of two truckloads of fuel products suspected to have been stolen from the ruptured pipeline. The Indian suspects were identified as the Managing Director, Prism Steel Mill Limited, Mr. Ashok Agarwal, and the Chief Security Officer of the company, Mr. Kamal Shema.

Others arrested in connection with the delivery are Fatai Afolabi, Emmanuel Igbokwe and Tukur Mohammed, who are accused of supplying the stolen products. The men are due to be charged in connection with the alleged offences.  

NNPC has reportedly already commenced repair of the pipelines in order to avoid a scarcity of petroleum products as a result of the closure of the pipelines.

Nigeria's Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has stated that the implementation of the Nigerian Content in the oil and gas industry has helped Nigerians to win 87 per cent of the total contracts in the industry, saying the achievement is the first step towards domiciliation of spend and local value addition in the industry.

Speaking at a recent meeting of the Governing Council of the Nigerian Content Development & Monitoring Board (NCDMB) held in Abuja, Alison-Madueke further disclosed that the Nigerian Content Act had in the past 30 months deepened the local supply chain and increased industry man-hours performed by Nigerians by over 350 per cent. She said this had resulted in over 30,000 direct productive jobs, adding "Just by insisting on using Nigerians in the industry, we have deepened the local supply chain"

The minister, who did not provide statistics to support her claims, however added that the jobs were generated in engineering, fabrication, exploration and production, marine transportation and logistics sectors, which had been developed to become more robust.

She expressed optimism that the job growth trajectory would not only be sustained, but also drive multipliers across industries following the integration of youth training into the implementation process.

"I have no doubt that more jobs will be created in 2013 and we shall achieve greater localisation of industry services, manufacturing and fabrication in 2013," she said.  

Not everyone is ecstatic about these figures as there is widespread suspicion that many foreign investors are registering companies and putting Nigerians in as figurehead directors or shareholders in order to qualify as Nigerian companies.

Nonetheless, the Minister continued: "The board has to a large extent achieved consensus in most aspects of Nigerian Content implementation to the extent that there has been no major dispute amongst stakeholders on the interpretation of provisions of the Nigerian Content Law."

"Stakeholders are also responding positively to the need to do things differently in the industry, for the benefit of all. This clearly demonstrates that we have been carrying the industry along in the implementation of the Act," she explained. 

Alison-Madueke also gave the assurance that the Federal Government would continue to support the board and its numerous local value addition initiatives, aimed at deepening indigenous participation in the industry.

Also speaking, the Executive Secretary of the NCDMB, Mr. Ernest Nwapa explained that the Nigerian Content implementation model was focussed on growing and utilising in-country capacity, while operators are made to consider long-term value addition. Nwapa said the industry must focus more on manufacturing, bringing back the bulk of fabrication jobs that were done in foreign countries and ensuring that pipes, valves, fittings and related equipment are procured from Nigeria. 

Exploration and production company, Afren, has received the thumbs up from Fox-Davies Capital. The international resources specialist predicts that 2013 should be a growth year for London Stock Exchange listed Afren.  According to the company, the latest trading update from Afren highlights the progress that has been made in the year, especially on the core Nigerian assets.  2012 was a solid year for the Africa-focused company.  It was more about the continued expansion of its operating base than its core activities. It main focus was on longer-term exploration projects, although its medium term outlook has been bolstered by its Kurdistan campaign.

Fox-Davies believes that, despite the string of financial commitments that need to be repaid from about the middle of the year, the company has reached "critical mass" in terms of how lenders perceive the risks within the Company. The resources specialist believes that with the range of producing assets, the Company's risk profile has been significantly reduced. As a result, 2013 should be a period of significant growth and should see the share price starting to reflect the value of its underlying assets.

Among Afren's string of successes from Nigeria is the Okoro Field Extension which encountered 549 ft of net oil pay (Pmean 157mm bbl STOIIP). First production came on-stream at 5,000 bopd. There is also the Ebok North Fault Block which encountered 370 ft net oil pay (Pmean 100mm bbl STOIIP). The Okwok-10 appraisal well is also ongoing.

The company had 2012 sales revenue of approximately US$1,500 million forecast (+151% increase over 2011). It's 2012 full year capital expenditure hit US$520 million and its forecast 2013 capital expenditure is in the region of US$620 million. Its net debt at 31 December 2012 was approximately US$488 million (31 December 2011: US$548 million)

Fox-Davis is reiterating its BUY recommendation and 250p Target Price. 

Nigeria's Central Bank Governor Sanusi Lamido Sanusi has issued a warning that the oil price benchmark recently agreed at $79 by Parliament, an increase from the $75 advanced by President Jonathan, is likely to stoke inflation. He said that higher government spending envisioned in the 2013 budget was detrimental.

Federal Government oil revenue, which stands at around 80%, over and above the benchmark is put in the Excess Crude Account as a cushion against future price fluctuation and is also used to invest in infrastructure. 

Sanusi said that the benchmark, which has been used in the 2013 budget, poses a serious risk to the objective of driving down inflation. Sanusi was speaking at a briefing on the recent meeting of the Monetary Policy Committee (MPC) meeting. He explained that the increase of the benchmark by parliament from the $75 advanced by the President to $79 could put pressure on the monetary policy as a whole, and inflationary measures in particular.

He gave the assurance that the MPC would continue to monitor the situation saying: "The committee reaffirms its commitment to respond appropriately if public spending ultimately adds to inflationary pressures."

External reserves received a boost as oil revenues rose to N6.24 trillion $40 billion for the first 11 months of last year, leading to a stability in exchange rates.  Sanusi said: "Overall, the relative stability recorded in the foreign exchange market could be attributed to the combined effects of improved supply of foreign exchange by oil companies and enhanced capital inflows from portfolio investors during the period under review."

"The Committee expressed satisfaction with the sustained accretion to external reserves which stood at US$43.849 billion as at December 31, 2012, representing an increase of US$1.682 billion or about 3.98 per cent from the level of US$42.167 billion at end-October 2012," he continued.

"Relative to the end-December 2011 level of US$32.915 billion, the external reserves at the end of December 2012, had risen by US$10.934 billion or 33.21 per cent," he added.

He said that the increase in the level of foreign reserves had been maintained mainly from proceeds from crude oil and gas exports and crude oil related taxes.

Other statistics to emerge from the briefing are: interest rates are to be maintained at 12%, liquidity ratio remains at 30% whilst national economic growth this year is predicted at 6.61%.

Regarding the interest rate, Sanusi said that in view of the fears about government spending in 2013: "the MPR (monetary policy rate) of 12% is considered to be at just about the right level." 

Independent producer, Heritage Oil Plc, has completed the previously announced disposal of its remaining 49% interest in the Miran Block in the Kurdistan Region of Iraq. The completion of the disposal paves the way for the funding of its purchase of Oil Mining Lease (OML 30) onshore in the Niger Delta. The OML covers 1,097 square kilometres and includes eight producing fields with oil and gas contained in numerous stacked reservoirs. The licence also includes a 45% interest in the segment of the Trans Forcados pipeline between the Eriemu Manifold and the Forcados River Manifold. 

Controversial Chief Executive Officer of Heritage, Tony Buckingham, said:"We are delighted to have received final approval for the disposal which means we have not only monetised the asset at an attractive valuation but have also used the proceeds to fund a significant part of our entry into a new region through the recent acquisition of a major interest in OML 30, Nigeria. This brings the total disposal proceeds generated by Heritage from asset sales to over $2 billion."

Heritage is dually listed on the Main Market of the London Stock Exchange (it is also on the FTSE 250 Index) and the Toronto Stock Exchange.  Following completion and receipt of formal approval of the transfer by the Regional Council, the company no longer has an interest in Kurdistan.

South Africa seems to have succeeded where Nigeria was wary to tread. Nigerian war lord, Henry Okah, has been found guilty in a South African court of being the brains behind two car bombings in Nigeria. Okah was convicted on several counts all, relating to terrorism offences and is now awaiting sentencing. The explosion for which militant group, Movement for the Emancipation of the Niger Delta (MEND) claimed responsibility, rocked Abuja as the country's 50th anniversary celebrations were underway. More than12 people were killed and scores more injured. 

Okah is understood to be one of the leaders of MEND He is also charged in connection with bomb blasts in Warri in 2010. He was arrested in Johannesburg after MEND claimed responsibility for the attack.  Prosecutor Shaun Abrahams expects to secure a life sentence. 

Nigeria did not apply for Okah's extradition preferring instead to allow the South African legal system to prevail over the case in accordance with the country's international obligations under treaty law.

After the much talked about privatisation of power, Aba in Abia State is getting its own power plant. The plant is owned by Geometric Power Ltd and will start operations in March. The Managing Director of the company, Agartha Nnaji, wife of the former Minister of Power who quit unexpectedly last year, said the 140 mega watt plant will supply uninterrupted power supply to Aba when it begins operations in March. 

Three turbines have been installed at the plant as well as a 27 kilometre gas pipeline which will supply gas from Shell Petroleum Company. The company has also built a sub-station and refurbished three Power Holding Company of Nigeria (PHCN) substations.

During the inspection of the facilities of the plant, the Minister of Information, Labaran Maku, confirmed that the Federal Government has awarded more licenses more private power plants across the country. He expects the commissioning of the power plant to boost public confidence in the Federal Government's power reform policies.

Sabotage and activities of crude oil thieves accounted for 81.3per cent of oil spills suffered by Shell Petroleum Development Company (SPDC) across the Niger Delta in 2012.

In the company's 2012 Spill Incident Data, which was obtained by NOGintelligence, Shell said it suffered 198 incidents of oil spills last year, with 161 incidents or 83.3 per cent resulting from sabotage and theft. Of the 198 cases, equipment and manpower failure, corrosion and aging of pipeline accounted for 18.7 per cent, representing 37 incidents.

"SPDC's operators continuously monitor for leaks and respond to anomalies. In addition, any reports, either by community surveillance teams under contract to SPDC or by the public, are responded to immediately. SPDC first shuts down the flow of oil to the leak before steps are taken to verify other details about the incident in preparation for the response, which starts with containment. By immediately shutting down pipelines or flowlines that are damaged and containing the spills, we minimise the damage to the environment," the report said.

The highest number of cases was recorded in 2012 occurred in August, when thousands of barrels of crude oil were lost to the environment and thieves.

"To provide transparency with respect to the cause and consequence of the spill, a team including relevant government agencies and SPDC is accompanied by representatives of impacted communities when they visit the site, as quickly as possible after the leak occurs. This Joint Inspection Visit, or JIV for short, determines the spread, the volume and the cause of the spill," said the report.

Shell listed members of the JIV to include the Department of Petroleum Resources (DPR), the National Oil Spill Detection and Response Agency (NOSDRA), the relevant State Ministry of the Environment and the Police.

The most serious incident was said to have occurred on August 16, when thieves tampered with the 28-inch Nkpoku - Bomu Trunkline at Ejamah and siphoned 1,076 barrels of crude oil.  Of the 25 cases of oil spill in that month, five were caused by the failure of the company's equipment, apparently due to aging or neglect, while 20 were caused by vandals and thieves.

In June 2012, the company recorded 24 cases, out of which 4 incidents were caused by operational failure on the part of the company, while the 20 cases were attributed to sabotage.

The third-highest number of incidents occurred in September when hundreds of barrels of crude oil were spilled in 23 incidents.  In that month, failure of Shell's equipment caused six incidents, while 17 were caused by vandals and thieves that hacking into the pipelines to siphon crude oil.

"After the clean-up, there can still be residual oil that has soaked into the soil, or oil that is sticking to vegetation. A post clean-up inspection, involving representatives from the same parties listed for JIVs, assesses whether the site needs further remediation to comply with international standards. If remediation is not required, then the spill site can be certified clean and the incident closed out," the report added. 

Fresh crisis looms in Burutu Local Government Area of Delta State as some Ijaw-speaking communities restated their resolve to shut down the operations of the Nigerian Agip Oil Company (NAOC) for alleged failure of the company to implement the Memorandum of Understanding (MoU) reached with the people.

NOGintelligence gathered that about five communities are at the forefront of the current agitation for the implementation of the MoU on the welfare of the communities.

The communities comprising Donyegbene, Abadegbene, Abiborgbene, Siakigbene and Eseimokumogbene all in Burutu Local Government protested late last year against the Grangbene 'DEEP'A Oil Well location project site.

The site was given to the NAOC through its contractor, BEKS-KIMSE Nig Limited, but the communities alleged that NAOC has not fulfilled the agreements it signed with the people in Port Harcourt on October 20, 2011.

Before the latest threats by the various communities, a former leader of the Niger Delta militants, Mr. Oyimi One, had reportedly called on President Goodluck Jonathan to prevail on the company to enter into a meaningful negotiation with the right people in Labobulouseigha community or face the wrath of former militants. The ex-war lord warned that the ex-militants would be forced to return to the creeks if AGIP did not desist from further subjecting the entire community to undue neglect.

He noted that since the company commenced operations in the area in 2009, the company had not accorded him and his ex- fighters any recognition.

A Nigerian tanker has been hijacked off the coast of Abidjan, in Ivory Coast, after being seized by armed pirates. The location of the vessel, laden with 5,000 tons of fuel and 16 members of crew, is currently unknown. The vessel, MT ITRI was in manoeuvres in preparation for the discharge of its cargo at the port when the gunmen struck. It's docking had been delayed by sandstorms. The vessel is owned by Brila Energy, a Nigerian petroleum trading company whose chairman, Rowaye Jubril said: "The vessel is still missing and the hijackers whose sole objective is to steal the cargo of Jet A1 on board the vessel are yet to make any demands."

Although these kinds of hijackings used to happen frequently off the coast of Nigeria, it seems that the Federal Government's tough response to the hijackings has made it more difficult for pirates who are now moving west towards Ghana and Ivory Coast for their illegal operations.