Shell Petroleum Development Company (SPDC) has reopened its beleaguered 150,000 barrel per day Trans Niger pipeline (TNP), which had been shut in for nearly two months. Although the pipeline has reopened, the force majeure declaration on Bonny Light crude remains in place.  

The shutdown of the TNP system on July 11, barely days after it had previously re-opened, involved the 28inch and 24inch streams and resulted in the deferment of 150,000 barrels of oil per day, and also led to tank tops and non-evacuation of condensate from Okoloma Gas Plant which supplies the 624 mega watt Afam VI Power Plant with feed gas. As a result, SPDC had to shut down Okoloma Gas Plant as it could not continue to produce gas without the evacuation of condensate.  

After the last leak on the TNP occurred on the 24inch stream at Owokiri, a Joint Investigation Visit comprising government agencies, community and civil society representatives and SPDC personnel found that a 6inch crude theft valve had been installed on the facility. The 28inch TNP had earlier been shut in for removal of similar oil theft connections.

The company's Corporate Media Relations Manager Tony Okonedo said at the time of the latest shut down: "SPDC is deeply concerned about the negative impact of incessant crude theft activities on lives and environment in the Niger Delta, and also the loss of electricity to businesses and households across the country. The total daily loss from the TNP shutdown alone comes to about $15 million (N2.4 billion)." 

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The price for the American West Texas Intermediate (WTI) rose by $2.85 per barrel to $108.21 per barrel. WTI's density is 40-degrees API with 0.4-05-percent sulphur content. This oil is mainly used to produce gasoline and therefore the demand is high, particularly in the U.S. and China.

The price for Brent rose by $0.03 per barrel to $111.03 per barrel. Brent Dated's density is 38.6-39 -degrees API with up to 1-percent sulphur content.

OPEC basket price fell by $1.40 per barrel to $107.64 per barrel.

Oando has revealed that its marketing subsidiary, Oando Marketing, is planning to build 50 new mega stations in major cities across the country. This move, said the company, will enable it to consolidate its position as a downstream market leader.  

Chief Operating Officer, Mrs Olaposi Williams, explained that Oando will build 10 new stations a year for the next 5 years. Each station, according to Mrs Williams, will be able to handle three truck loads of premium motor spirit a day and will also boast retail shops. She said that 50 per cent of the new stations will be situated in Lagos, 30 per cent in the Federal Capital Territory and the East and North will get 10 per cent each.

Whilst this is good news for the industry and consumers, cynics might say that the timely revelation might be calculated to ease the discomfiture of investors who have been rattled by allegations of connections between the company and former Governor, James Ibori who is currently in prison in the UK after being convicted of money laundering. The company has strenuously denied the allegations but shareholders are offloading their shares, leading to a 21 per cent drop in the company's share price in 3 days of trading. 

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Oando has issued a stringent denial of the allegations made in a London court that the former Governor of Delta State, james Ibori, who was convicted of, and imprisoned in the UK for, money laundering, owns a 30 per cent stake in Oando. The denial came as Oando's shares traded low for a third day on the Nigerian Stock Exchange dropping by 21 per cent to close at N9.32 per share on Wednesday.  

The allegations were made at a hearing at Southward Crown Court for the confiscation of Ibori's assets during which it was revealed that Ibori had informed a UK Bank at which he wanted to open a bank account that he was a major shareholder of Oando. According to Wass, two transfers of $500,000 were made from Oando to Ibori's account and on yet another occasion, the company transferred the sum of £1.2 million to Ibori's account. This, said Wass, was evidence that: "Oando is a place where he has hidden his assets."

Oando however said in a statement that any suggestions that Ibori was a major shareholder were untrue. According to the company, which is a major downstream player and which is dually listed on the Johannesburg Stock Exchange, Ibori's shareholding in the company currently stands at 443 shares out of a total issued share capital of 6.8 billion ordinary shares. This, they say, is clearly an insignificant stake in a company with a market capitalisation of N63.6 billion and cannot be considered "a large part of Oando" as had been suggested in court.  

Responding to the allegations that it had transferred certain sums to Ibori, the company explained that the it had, in the normal course of business, sold some of its foreign exchange earnings for Naira. According to the company, the recipient of the dollar amount was a company which unknown to Oando at the time, was controlled by Ibori.  

Explaining further, the company said: "The total amount was US$2.7 million made in a 3 separate transactions over a period of about 7 months."

"This amount was insignificant considering the company's turnover of approximately US$800 million in 2004," the statement added.

The company was keen to point out that these were the only transactions between Oando and Ibori and as such, "Oando cannot be described as a company where James Ibori has hidden assets as a result of these foreign exchange transactions."

In its efforts to further distance itself from the allegations, Oando has now published a list of its top 20 shareholders in 2004, the time that Ibori is alleged to have held a significant stake in the company. By far the largest shareholder was Ocean and Oil Investments Limited with 24.69 per cent. The remaining top 19 includes some institutional investors and some private companies, but these are all smaller shareholdings of between 0.23 per cent and 3.34 per cent each.

In spite of Oando's strong denials, investors remain jittery with stockbrokers reporting that many are selling their shares as they fear that Oando might not be able to emerge untainted by the allegations. Oando has been criticised in some quarter for not raising the alarm when it became aware of the Ibori connection.  

Of course some, with a more forward-looking view see this as an opportunity to acquire the company's shares on the cheap. As the case continues, things could get worse before they start to get better for Oando. Analysts however say they expect the company to ride out the storm, recommending the shares as an opportunistic buy at this time. 

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The Central Bank of Nigeria (CBN) has released its Q2 report, which reveals, unsurprisingly that oil revenue continued to decline. Gross oil receipts of N1,813.77 billion, which constituted 76.5 per cent of total revenue declined by N35.7 billion representing1.9 per cent below the preceding quarter except domestic crude oil and gas sales. As a percentage of projected second quarter 2013 nominal GDP, oil revenue was 25.6 per cent.

Crude oil and natural gas production decreased by 5.9 per cent to 1.93 mbd (175.63 million barrels) compared with 2.05 mbd (184.5 million barrels) in the previous quarter.

Crude oil exports also recorded a decrease in Q2 2013. Exports achieved an estimated 1.48 mbd (134.68 million barrels) compared with 1.60 mbd (144.0 million barrels) in the previous quarter, representing a decline of 7.5 per cent. CBN attributed this development to the "incessant pipeline vandalisation resulting from crude oil theft in the Niger Delta."

Allocation of crude oil for domestic consumption was 0.45 mbd (40.95 million barrels) during the period under review.

Average crude oil prices, including the price of Nigeria's reference crude, Bonny Light (37o API) fell in the international crude oil market in Q2 2013. Bonny Light fell by 8.8 per cent from the level in the preceding quarter. The average price of other competing crudes, namely UK Brent and Forcados also declined to $103.14 and $106.46 per barrel respectively from $113.68 and $116.89 per barrel in the preceding quarter, while the West Texas Intermediate (WTI) at $93.97 recorded a slight increase of 3.2 per cent.

Similarly, the average price of OPEC's basket of 11 crude streams, at $100.90 per barrel also declined by 7.8 per cent and 4.9 per cent, compared with the average of US109.48 and $106.08 per barrel in the preceding and corresponding quarter of 2012 respectively.

The fall in prices was attributed to the on-going Eurozone economic turmoil and high record levels of the US oil inventories.

Crude Oil Prices in the International Oil Market:  

The Joint Task Force (JTF) says it is putting up a determined fight against illegal bunkering after its operatives arrested 20 people who were allegedly involved in illegal oil refining.   

A spokesman for the JTF, Lt. Col. Onyema Nwachukwu, said the men were apprehended during an Operation Pulo Shield patrol in Opodibobo creek near Escravos in Warri South West Local Government Area of Delta State.

He said one big Cotonou boat, containing 11 large plastic reservoirs and a speed boat were recovered from the suspects. "The suspects are currently undergoing preliminary investigations to uncover their links and other collaborators in the illicit trade," he said.

Nwachukwu also revealed that in another operation, seven suspects were arrested by troops of 3rd and 19th Battalions covering the Sector 1 area of responsibility of JTF. "During the operation, the troops scuttled 16 illegal oil distillation camps and 21 Cotonou boats," he said.

"The troops also scuttled 503 steel tanks, 22 cooking ovens, 44 plastic tanks, 16 large surface tanks, 12 dug-out pits, 329 drums and 13 pumping machines during the operation," he added.

In Bayelsa State, he said operatives of 343 Artillery Regiment and Gun Boat Company also arrested eight suspects for indulging in illegal oil bunkering activities.

A legal battle is looming between indigenous company Salof Industries Nigeria Limited and American giant General Electric (GE) Oil and Gas Incorporated. The disagreement stems from GE's termination of Salof Industries' commission agreement with Salof Refrigeration Companies USA following the acquisition of the latter by GE. US based Salof Refrigeration is a designer and manufacturer of small-scale liquefied natural gas technologies. The acquisition gives GE Oil and Gas access to Salof small-scale Liquefied Natural Gas and Co2 Processing technologies and fabrication expertise.

According to Salof Industries, it had a commission agreement with Salof Refrigeration under which it would be paid a 20 per commission on all orders originating from Nigeria, Ghana and Uganda.  

Salof Industries claims that following GE's recent acquisition of Salof Refrigeration, GE wrote to Salof Industries, terminating its commission.  

Salof Industries insists that GE must mitigate its losses as a result of the acquisition.

Ogogoro Island, Lagos is to become an offshore facilities fabrication and maintenance centre following the signing of the contract between Digisteel Integrated Services Ltd and Dredging International Services Nigeria for the development of the Island. This will increase indigenous capacity in the vital area of fabrication and maintenance of Floating Production Storage and Offloading Vessels (FPSOs).  

The $500 million development of Ogogoro Island, which will be the first such facility in West Africa will begin with the dredging and reclamation of Ogogoro Island. This first phase of the project which has been on the drawing board since 2006 will take four months to complete.  

Skye Bank and Diamond Bank are financing the development while Digisteel will provide equity finance. Chairman of Digisteel Integrated Services, Mr. Olatunde Ayeni explained: "We will raise the debt from Skye Bank and Diamond Bank and we will provide the equity portion to support the project in the production of oil."

Ayeni stressed that the work would be carried out in accordance with the local content laws. He said that fabrication work for the offshore installation would take place in Nigeria. The project is expected to generate thousands jobs for Nigerians both directly and indirectly when complete.

The Shell Petroleum Development Company of Nigeria (Operator of the NNPC/Shell/TEPN/Agip Joint Venture) Scholarship Scheme offer first year students in all Nigerian universities the opportunity to study with an annual grant from the SPDC JV for the full duration of their course.  

Students must be citizens of Nigeria, currently enrolled in a first degree programme at an accredited and approved university in Nigeria and must have gained university admission for the 2012/13 academic session. Applications should be online submitted before October 31, 2013. 

SPDC Invites Tenders for Provision of Oil Spill and Remediation Services

Shell Petroleum Development Company invites interested and registered Nigerian companies to respond to the opportunity for the provision oil spill and remediation Services on a call off basis. The proposed contract will commence in the second quarter of 2014. The scope of service covers the provision of pre-mobbed logistic equipment for evacuation, storage, spill response and haulage of impacted debris/vegetations, recovery and evacuation of free phase oil to designated flow stations and containment of spill site in swamp and land areas.

Only tenderers who are registered with NJQS product/category shall be invited to submit technical bids. The closing date for this opportunity is 30th September 2013.

Chevron Invites Tenders for Provision of Surfer Boats in Support of Offshore Operations

Chevron Nigeria limited invites interested and registered Nigerian companies to respond to the opportunity for the provision surfer boats in support of NNPC/CNL joint venture offshore oil and gas production operations. The scope of service covers the provision of surfer boats in support of Chevron Nigeria/Mid Africa offshore operations at Escravos, Eastern operations, and any other company area of operations.  

Only tenderers who are registered NJQS product/category 3.08.17 (supply vessels) shall be invited to submit technical bids. The closing date for this opportunity is 30th September 2013.

NNPC invites interested competent and reputable Backbone Connectivity providers to submit bids for the Provision of  Secure WAN/MPLS/VPN based Enterprise Wide Area Network between the NNPC CHQ and her Strategic Business Units. 

Bidders should pick up the detailed comprehensive bid document from the E&T Dexcom Tender Board on the 10th Floor of Block A at NNPC in Abuja. 

Oil &Money

London, United Kingdom

1 - 2 October

The Africa Gas Association Inaugural Meeting

Nairobi, Kenya

13 - 15 October 2013

www.thefricagas.org

World Energy Congress

Daegu, South Korea

13 - 17 October

6th International E&P Upstream Conference

Houston, USA

16-17 October 2013

www.ziffenergy.com

Deep Offshore Technology International

Houston, United State of America

22 - 24 October

OTC Brasil

Rio de Janeiro, Brazil

21 - 29 October 

www.otcbrasil.org  

Africa Oil & Gas Finance and Investment Forum

Dubai, United Arab Emirates

22-23 October 2013

www.aogfi.com

Oil and Gas Trade and Investment Forum 2013

Onne, Rivers State, Nigeria

24-25 October 2013

www.nigeriaoilandgasinvest.com