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Heritage Oil Refinances Nigeria Operations

London Stock Exchange listed Heritage Oil has secured a revolving reserves based lending facility for its Nigerian operations. It secured the lending through the special purpose vehicle, Shoreline Natural Resources Limited, formed between Heritage and local partner, Shoreline Power Company Limited. The new facility is a five year $500 million senior secured revolving facility, which can be increased up to $600 million.

The facility replaces the bridge loan Heritage obtained when it completed its acquisition of a 45% interest in oil mining lease (OML 30). The company says the reserves based lending facility provides better terms and greater flexibility than the bridge loan, which has now been fully repaid.

The new lending was financed by Standard Bank, joined by a syndicate of three leading Nigerian banks, First City Monument Bank (FCMB), Ecobank Nigeria and Fidelity Bank.

OML 30 covers 1,097 square kilometres and is located onshore in the Niger Delta. It included 8 producing fields and a 45 per cent interest in the segment of the Trans Forcados Pipeline between the Eriemu and the Forcados River manifolds.

Oil Contribution to GDP Dropped by 6.65% in 2013

According to the data released by the National Bureau of Statistics (NBS) recently the year on year GDP contribution of the oil and gas industry may have dropped by 6.65 per cent as the contribution fell from 15.8 per cent in first quarter of 2012 to 14.75 per cent in Q1 of 2013.

The decline in the contribution by the oil sector in the first quarter of 2013 relative to the corresponding quarter of 2012, NBS says, may not be unconnected with the increasing vandalism, bunkering and ultimately oil theft, which is said to be costing the Nigerian economy about $7bn annually.

"During the period under review, the Nigerian oil sector witnessed some levels of disruption as a result of pipeline vandalism and bunkering incidents with some oil companies such as Eni (Agip), Shell and others declaring force majeure during the quarter," the NBS said.

According to the NBS, the sector recorded an average daily production of 2.29 million barrels per day in the first quarter of 2013 based on data obtained from the Nigerian National Petroleum Corporation as against 2.35 million barrels per day in the corresponding quarter in 2012.

"These figures, with their associated gas components, resulted in a growth rate, in real terms of -0.54 per cent in oil GDP in the first quarter of 2013 compared with the 2.32 per cent for the corresponding period in 2012," the NBS said.

However, the NBS said the oil sector benefited immensely from the relative stability in international crude oil market price and the exchange rate of naira against the dollar.

On an aggregate basis, NBS said the economy when measured by the Real Gross Domestic Product, grew by 6.56 per cent in the first quarter of 2013 as against 6.34 per cent in the corresponding quarter of 2012, and 6.99 per cent in the fourth quarter of 2012.

Mobil Ordered To Pay $83.4 Million Education Tax 

The Tax Appeal Tribunal has ordered Mobil to pay $83.4 million to the Federal Inland Revenue Service (FIRS). The judgment by the Tax Appeal Tribunal represented Education Tax liability of the company to the Federation during the year 2008.

The company had denied liability for the tax after the liability assessment was first raised by FIRS and in 2011 it launched an appeal against the liability, claiming that the assessment was in breach of a memorandum of agreement (MOU) signed between the company and the Federal Government of Nigeria and the Nigerian National Petroleum Corporation in 1996. According to the company the MOU was renewed in 2000. The company claimed that under the MOU it could deduct taxes paid to other state agencies from the tax due to the Federal and State governments.

FIRS however argued that the MOU was for three years and that its validity had expired in January 2003 particularly in view of the Petroleum Profits Tax Act which replaced the MOU and under which the assessment was raised.

Ruling in favour of FIRS, the Tribunal said that although the MOU contained an option to renew at the instance of all the parties, the option was never exercised and as a result Mobil was no longer entitled to calculate its education tax with reference to the terms of the MOU. 

Commenting on the judgement, Nigeria Extractive Industries Transparency Initiative (NEITI) said it welcomed the decision of the Tribunal. The organisation said the "bold" decision would draw attention to the findings and recommendations of NEITI on the issues of underpayment and under-assessment in royalties, taxes, signature bonuses, rents, clearly exposed by its independent audit reports of the oil and gas sector, over the years.

In its statement, NEITI said that the judgement is also a vindication of the findings of its 2006-2008 independent audit of the Oil and Gas sector. NEITI said it had revealed in that audit that Mobil owed $83.28 million Education Tax for 2008.

NEITI said: "It is on record that NEITI has consistently alerted the nation that out of $9.8 billion uncovered by its audit reports as the difference between what was paid and what government received, only $2 billion has been recovered through NEITI efforts, leaving a balance of $7.8 in the hands of companies."  

President Jonathan has now directed the Secretary of the Federation, Senator Anyim to constitute a high-powered committee to assist NEITI in recovering the rest of the outstanding $9.8 billion identified by them as being due to the Federation Account..

The Nigeria Liquefied Natural Gas (NLNG) has declared force majeure on its exports of LNG after the Nigerian Maritime and Safety Agency (NIMASA) blockade continued over a tax dispute. As a result of the blockade of the Bonny Channel, LNG tankers have been unable to enter the port to take on supplies of LNG. Three vessels are currently unable to enter or leave the port.  NLNG has refused to pay levies raised by NIMASA based on the gross tonnage on exports and imports under the cabotage law.

NIMASA's case is that the NIMASA Act 2007 in section 15 stipulates that the agency shall be funded by monies accruing to it from, among other sources, a levy of three per cent of gross freight on all international inbound and outbound cargoes from ships or shipping companies operating in Nigeria as part of the funds to meet the operational costs of the agency.

NLNG meanwhile is refusing to pay the fees saying that it is exempted from doing so by the Act establishing NLNG.

The matter is now in court and on the 18th of June, a Lagos Federal High Court issued an injunction preventing NIMASA from mounting any kind of blockade on the Bonny Channel. The Federal Government has since applied to court to ask for NIMASA to be removed as a party in the suit on the basis that the regulator was not a party to the suit.

This new force majeure declaration is a major blow coming only a few weeks after Shell Petroleum Development Company (SPDC) lifted its force majeure declaration its gas supplies to NLNG after completing repairs following a leak in its Eastern Gas Gathering System (EGGS-1) right-of-way (RoW) pipeline near Awoba in Rivers State.

The President of the Nigerian Liquid Petroleum Gas Association (NLPGA), Dayo Adeshina,  has warned of an impending shortage of LPG if NIMASA does not lift the current blockade of Bonny Port. The newly appointed President of the Association said that suppliers' storage tanks are about to run dry. 

Adeshina explained: "At this point in time, the Gas Providence, which is the supply vessel for domestic gas is still in the Bonny Terminal of NLNG and will not sail until NIMASA releases it. The owners have paid the statutory fees that NIMASA is asking for. The vessel still hasn't been released and if we don't have that vessel sail this weekend there is going to be scarcity of LPG nationwide." 

Adeshina has been shuttling between the various agencies involved to try and secure the release of the vessel so that the NLPGA members can obtain vital supplies for the domestic market. He said that the situation was very grave and giving his members cause for concern.

Petrol queues, which were starting to grow in Lagos and Abuja following the commencement of a three day "warning strike" by the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG) have disappeared as suddenly as they began. NUPENG called a 3-day strike over what it called anti-labour practices by International Oil Companies (IOCs). It had previously issued a 14-day strike notice to oil majors, Shell Petroleum Development Company, SPDC, Chevron Nigeria Limited and Agip Oil Company.

President of NUPENG, Achese Igwe, is demanding a stakeholders' national conference on oil and gas. He wants the conference to deal with labour issues in the sector. The Union is accusing the oil giants of unfair labour practices, which it says are worsening.  

When he issued the notice, Igwe said:"We are giving the Federal Government, the Ministry of Petroleum, the National Assembly among other well meaning Nigerians and groups, a 14-day ultimatum to intervene and summon an all embracing stakeholders national conference to address all labour issues in the industry failing which, we will declare an indefinite nationwide strike."

It appears that the strike was called off after just two days following a meeting with the Nigerian National Petroleum Corporation and other stakeholders.

The price of OPEC basket of twelve crudes stood at 102.24 dollars a barrel on Wednesday, compared with $100.63 the previous day, according to OPEC Secretariat calculations. The basket price had been fluctuating since last week (Thurs 27 - $100.37, Fri 28: $100.78, Mon 1 Jul - $100.10, Tues 2 Jul - $100.63) before rising sharply by nearly $2 on the news of rising political tensions in Egypt, which raised concerns about the stability of the whole region. 

Introduced on 16 June 2005, is currently made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).    

Senate To Hold PIB Public Hearing on 16 and 17 July

The Senate Joint Committee on the Petroleum Industry Bill (PIB) has issued an invitation to stakeholders and members of the general public to a two-day public hearing on the PIB as the Bill continues to inch its way slowly towards passage.  The meeting is scheduled to hold on the 16th and 17th of July from 10am each day in Conference Room 022, New Senate Wing of the National Assembly Complex.

The first day of the hearing is reserved for the Ministers of Petroleum, Finance, Federal Capital Territory, State Governors and Heads of relevant government agencies, while oil companies and relevant trade associations have been invited to attend on the second day.

It is generally believed that the passage of the Bill will unlock billions of dollars worth of investment destined for the oil and gas industry. The current lack of clarity has led to International Oil Companies (IOCs) withholding major investment into the sector. Some commentators however remain skeptical about the passage of the Bill given its ambitious scope (consolidation of 16 separate pieces of legislation) and the opposition from different factions to many provisions in the Bill. 

The Nigerian Academy of Science is to partner with Nigeria Extractive Industries Transparency Initiative (NEITI) in an effort to find solutions to the issue of measurement of Nigeria crude through evidence based research on introduction of metering infrastructure in the oil and gas industry.

The President of the Academy, Professor Oyewale Tomori made the pledge in Abuja when he led the Academy on a courtesy visit to the Executive Secretary of NEITI, Mrs. Zainab Ahmed.

Professor Tomori explained that NEITI's persistent concern, expressed in its Audit Report, that there is no reliable scientific mechanism to measure the quantity of crude produced in Nigeria, is a national issue that requires the intervention of Nigerian Academy of Science.

The Academy which is made up of renowned scientists from major fields of natural, physical, applied and environmental sciences has promised to mobilise its members to carry out an in-depth research in collaboration with NEITI. The goal of the Academy will be to come out with a scientific mechanism that will introduce a metering regime to guarantee that Nigeria's crude being extracted by companies are adequately measured to check the continued loss of revenue.

The Executive Secretary of NEITI said: "A situation where Nigeria continues to rely on figures by companies who are in business for information to determine quantity of crude produced is inappropriate and unacceptable."  

Shell Expresses Rising Concern over Spills From Crude Theft 

The Shell Petroleum Development Company of Nigeria Ltd (SPDC) has raised alarm over the rising incident of oil theft from its Adibawa Field, straddling the Biseni, Edagberi and Ikarama communities in Eastern Niger Delta. This year alone, between January and June, there have been 8 recorded crude oil theft and sabotage related spill incidents resulting in 500 barrels of oil spilled into the environment according to the company. 

The Adibawa field, and majority of the other spills were caused when unknown persons inflicted extensive hacksaw cuts on pipelines according to the company. A joint team comprising regulators, government ministries, SPDC and communities investigated each of the spills which the company says was caused by extensive hacksaw cuts on the pipelines.

The largest incident occurred on the Adibawa - Okordia pipeline at Ikarama in June when 447 barrels were spilled. The company said that in line with its spill response strategy it immediately shut down the pipeline and mobilised teams to the site for containment and recovery of the spilled oil. Shell says it will commence clean up operations later this year.

SPDC Managing Director and Country Chair, Shell Companies in Nigeria, Mutiu Sunmonu said: "We are very concerned over the rising trend of spills in Adibawa field." 

"All stakeholders must work together to try to stop this crime against Nigeria," he added.

SPDC has set up a website to record details of all spills, whether operational or from sabotage.  This is part of its effort to bring transparency to spills reporting and the company says that its spills website is the only such one in Nigeria. The website address is: www.shellnigeria.com/spills.

Rainoil Acquires Two New Vessels for Ship-To-Ship Transfer

Rainoil Limited, a leading indigenous petroleum products marketing company, has inaugurated two newly acquired oil vessels, the 20,000 tonne MT Adeline and the 15,000 tonne MT Emmanuel. Rainoil expects the vessels to help boost petroleum products availability and distribution in the country. The company explained that the double-hulled vessels meet international standards and have world class facilities. They will be deployed for quick ship-to-ship loading of petroleum products.

The vessels were inaugurated at the Rainoil Jetty and multi-product tank farm in Oghara, Delta State by the Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), Mr. Reginald Stanley. He said: ''Although Rainoil is a big player in the PMS (Premium Motor Spirit) to the nation, these vessels will provide an excellent logistic to other players in the downstream. I therefore urge other marketers to use the services of these vessels, so as to optimise its utilisation, thereby reducing the unit cost of freight." 

"There is also the need to patronise our local fender providers in STS (Ship-To-Ship) operations, so as to build a strong synergy in shipping operations. A situation where foreign fender providers dominate the market should be discouraged,'' he added.

Managing Director/CEO, Rainoil Ltd, Engr. Gabriel Ogbechie, said the new vessels were positioned to enhance the distribution of petroleum products to the South-South, South-East, the Federal Capital Territory and Northern states.

Rainoil began operations in 1997 and now has over 25 retail outlets across Nigeria, 60 tank trucks, 50-million litre capacity petroleum products storage depot, a jetty and now two oil vessels.  

African Military Chiefs to Convene Urgent Conference on Maritime Insecurity

Vice Admiral DJ Ezeoba, the Chief of Naval Staff of Nigeria, responding to the increase of maritime insecurity in the Gulf of Guinea, has called an international conference of military chiefs and politicians to bring resolution to the matter.  The waters around West Africa are considered some of the most insecure in the world, with the International Maritime Bureau announcing in June 2013 that for the first time piracy incidents in West Africa have overtaken those occurring off Somalia.

The Nigerian Navy has therefore taken a lead in organising Offshore Patrol Vessels Africa, a summit, which will take place in Lagos from the 27th to the 29th of August. The Nigerian Navy will be accompanied by senior Naval Chiefs from Ghana, South Africa, Djibouti and Tanzania amongst many other Africa nations. Lending their expertise from around the world, admirals from Germany, Malaysia, USA and Spain are also lecturing at the conference.

Rear Admiral E.O. Ogbor, Chief of Policy and Plans, Nigerian Navy, said: "Undoubtedly, many littoral African countries have considerable oil and gas reserves, bountiful fisheries and viable Sea Lanes of Communication. Despite this, we can all agree that maritime insecurity and illegal activities at sea threaten to undermine the great potential of this continent and therefore no time can be spared in discussing and implementing decisive solutions to our common problems."