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NOG INTELLIGENCE
ANNUAL REVIEW
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Greetings!
Welcome to our 78th issue. This is our last newsletter for the year and we will be away for the next 2 weeks, resuming on the 3rd of January. I wish you all a wonderful holiday season and a bigger and better 2014!
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DPR Director: Marginal Field Bid Round Proceeding as Planned
The Department of Petroleum Resources (DPR) has issued a notice to prospective bidders in which it says that the 2013 Marginal Field Bid Round is proceeding as planned. The DPR has however failed to follow its own schedule for the upload of information to the website which increasingly created a doubt about whether it would be sticking to its schedule for the bid round. During the road show, the Director of DPR revealed the time schedule for the application process. The list of fields, the map and application forms were to be uploaded to the website by the 14th of December and the submission of applications and pre-qualification was to take place over 3 weeks from the 16th of December to the 3rd of January. This leaves a very short window for the submission and vetting of applications, although the Director of DPR says everything is going ahead as planned. The notice says that the modalities and other information on all the fields on offer, including application process, will soon be uploaded on the website. Prospective applicants are assured that the time frame earlier set for the Exercise remains unchanged and reasonable time would be allowed for proper completion at every stage of the Bid Round, the notice also said.
The Schedule of Activities
- Public announcement and Promotion: 28 November
- Road Show: 2 weeks from 4 to 12 December
- Submission of Applications and Prequalification: 3 weeks from 16 December to 03 January
- Evaluation of submitted Prequalification Applications: 2 weeks from 6 to17 January
- Notification of Pre-Qualified Companies by Email: 1 week from 17 to 24 January
- Online Data Room (ODR): 1 week from 24 to 31 January
- Physical Data Room (Data Prying): 3 weeks from 31 January to 21 February
- Data Leasing: 2 weeks from 21 Feb to 07 March
- Submission of Applications: 3 weeks from 21 Feb to 07 March
- Final Bid Evaluation: 3 weeks from 7 March to 28 March
- Presentation by Qualified Bidders: 2 weeks from 28 March to 11 April
- Submission of recommendation by Committee: 11 April
Interested parties are advised to keep checking the DPR website www.dprnigeria.com regularly for updates. NOGintelligence will also send out a notice once the applications forms are uploaded to the website and a link will be on NOGintelligence website.
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NOGintelligence has prepared a Briefing Note on the Marginal Field Bid Round. You can get a copy from our website or you can Click here.
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Brittania-U Gets Temporary Injunction Over Chevron Transaction
An interim injunction has been issued by a Federal High Court sitting in Lagos restraining Chevron Corporation of the United States and its Nigerian subsidiary, Chevron Nigeria Limited (CNL) or any of its agents from negotiating the sale of Oil Mining Leases (OMLs) 52, 53 and 54, with Seplat Petroleum Development Company (SPDC) Limited or any other bidder.
Justice M. N. Yunusa, who presided over the matter, also issued an injunction restraining Chevron and its agents from declaring Seplat Petroleum Development Company or its agents as the preferred bidder for the oil blocks, but rather Brittania-U Limited, which emerged the highest bidder in the transaction.
Brittania-U had approached the court for intervention after alleging that CNL and Chevron USA have been working behind the scenes to ignore the result of the competitive bid conducted for the sale of Chevron's 40 per cent interest in the three oil blocks.
The multinational oil company, by the injunction was also ordered not to execute a definitive agreement or any other agreement with Seplat or any other bidder, apart from Brittania-U.
Others joined in the suit were CNL, Chevron USA, BNP Paribas Securities Corporation, Mr. Hermant Patel and Seplat Petroleum Development Company Limited.
Brittania-U emerged as the highest bidder, offering a reported $1.6 billion, while Seplat and its partners came second with an offer of about $900 million.
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IEA Report: Non-OPEC Supply Highest in Decades
The December issue of the Oil Market Report, a monthly International Energy Agency publication, has raised the estimate of global oil demand for 2013 by 130 000 barrels per day (130 kb/d), to 91.2 million barrels per day (mb/d), on stronger-than-expected third-quarter demand growth among OECD countries of 320 kb/d. Global demand is now seen advancing by 1.2 mb/d in both 2013 and 2014, to reach 92.4 mb/d in 2014.
Global oil supplies increased by 310 kb/d in November to 92.3 mb/d, as non-OPEC crude output topped 43 mb/d for the first time in decades. Year-on-year, November supplies rose by 810 kb/d, as a 1.9 mb/d surge in non-OPEC liquids and OPEC NGL more than offset a 1.1 mb/d drop in OPEC crude.
OPEC crude supply fell by 160 kb/d in November to 29.73 mb/d, its fourth consecutive monthly decline. Renewed disruptions in Libya and smaller drops in Nigeria, Kuwait, the United Arab Emirates and Venezuela more than offset higher output in Iran, Iraq and Angola.
Global refinery crude runs plunged to 73.6 mb/d in October, down by 2 mb/d on September and by 1 mb/d from the previous year, on sweeping plant maintenance and weak margins. OECD Europe and the United States led the decline. Throughputs are projected to rebound to 76.3 mb/d in the current quarter, up 180 kb/d from a year earlier, and to 76.7 mb/d in the first quarter of next year, a year-on-year rise of 1.2 mb/d.
OMR provides a view of the state of the international oil market and projections for oil supply and demand 12-18 months ahead.
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OPEC Daily Basket Price Stood at $106.74 a barrel Wednesday, 18 December 2013
The price of OPEC basket of twelve crudes stood at $106.74 a barrel on Wednesday, compared with $106.57 the previous day, according to OPEC Secretariat calculations. Prices continue to rally after a steep drop of just over $2 between 4th of December and 10th of December.
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).
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Oil Workers Want Refineries Privatised in Line with PIB
After initially opposing the sale of the nation's refineries, oil and gas workers' unions, Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) have said that if the refineries are to be privatised at all it must done in line with the objectives of the Petroleum Industry Bill (PIB).
In a statement jointly signed by NUPENG President, Mr. Achese Igwe and PENGASSAN President, Mr. Babatunde Ogun, the oil and gas workers seem to have revised their position, saying that they are not against any privatisation programme involving the refineries but are of the opinion that an industry-wide consultation with workers ought to be carried out to make the process successful.
They said Nigerians and workers desired an assurance that the intended model for privatising the refineries would be properly aligned with the PIB so that the whole PIB process.
There is also concern in some quarters about the speed of the sell-off. The Minister of Petroleum Diezani Alison-Madueke said that the privatisation would be completed by the end of April.
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"Missing" N48 Billion Oil Sales Proceeds Mostly Accounted For
Only a few days after the dramatic revelation of the details of a memo written by Sanusi Lamido, the Governor of the Central Bank of Nigeria (CBN) to the President accusing the Nigerian National Petroleum Corporation (NNPC) of failing to remit $48 billion to the Federation Account, Lamido has retracted his accusations. In the letter, Lamido had accused NNPC of failing to account for crude oil sales receipts representing 76% of the value of crude oil liftings for the period from January 2012 to July 2013. Lamido concluded in the letter, which was leaked to the press, that the amount of $48 billion was missing.
Now, the CBN Governor says that all but $12 billion has been satisfactorily explained. Appearing before the Senate Committee on Finance, he explained: "About $24billion was actually not their crude but crude shipped on behalf of third parties like oil companies, tax in crude and also for third party financing and so, that already addresses half of the amount."
Sanusi Lamido had accused NNPC in the letter of failing to remit $48 billion representing 76% of the value of crude oil liftings in 2012 and 2013. He said he felt constrained to write to the President over the continued failure of NNPC to repatriate significant proportions of the proceeds of crude oil shipments in made, in gross violation of the law.
A detailed analysis given in the letter shows that for the period from January 2012 to July 2013, NNPC lifted 594,024,107 barrels of crude oil valued at $65,332,350,514.57 and representing 46 per cent of total oil liftings from Nigeria during the reference period. Out of this amount, the letter states, NNPC repatriated only $15,528,410,098.77 representing only 24 per cent of the value. The letter continues: "This means that the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49,804 billion or 76 per cent of the value of the oil lifted in the same period."
Lamido said he had expressed grave concern, even as far back as 2010, to the President about what appeared to be huge shortfalls in remittances to the Federation Account in spite of the strong recovery in the oil price. He had told the President, he said, that: "While Government needs to continue its effort to combat oil thieves, vandals and illegal refineries in the Niger Delta, the major problem is the transactions taking place under legal cover with huge revenue leakages embedded therein."
To demonstrate how bad the problem is Lamido pointed out that in 2012 the Federation Account received $28.51 billion in Petroleum Profits and related taxes but only $10.13 billion from crude oil proceeds. In the period from January to July 2013, the corresponding figures were $16.65 billion and $5.39 billion.
When news of the memo broke, NNPC spokesman Omar Farouk Ibrahim explained in a statement that the allegations were borne out of a misunderstanding of the workings of the oil and gas industry and the modality for remitting crude oil sales revenue into the Federation Account.
He explained that 618.55m barrels, rather than the 594.024 million barrels of crude oil stated by the CBN, was the total crude oil lifting for the period of January 2012 to July 2013.
He explained that revenue from crude oil liftings are in various categories, namely Equity Crude, Petroleum Profit Tax, Royalty, Third Party Financing and the Nigerian Petroleum Development Company, NPDC adding that revenues from each of these categories are statutorily collected by different agencies of the government.
Continuing his explanation, Ibrahim said that NNPC collects only one of the aforementioned categories, namely Equity Crude. "Petroleum Profit Tax is collected by the Federal Inland Revenue Service (FIRS); Royalty goes to the Department of Petroleum Resources (DPR), Third Party financing goes for Research, Development, Program and Satellite fields Development, while NPDC goes to NPDC for upstream development," he added.
He said that 24 per cent of total crude oil revenue receipts, which the CBN governor is reported to have acknowledged that NNPC remitted, represents the proceeds from the equity lifting which NNPC is directly responsible for. The alleged unremitted 76 per cent was paid, he said, to the agencies that are statutorily empowered to receive them for onward remittance into the Federation Account.
Lamido, however, says there is still a dispute over the amount of $12 billion which he says is still unaccounted for from the point of view of CBN but he stressed that the reconciliation exercise is still on-going.
Lamido also made a number of recommendations to the President in the memo, including requiring NNPC to provide evidence for the disposal of all proceeds of crude sales and to investigate crude oil lifting and swap contracts.
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PPMC to Provide 21 LPG Skids Across the Country
As the Federal Government struggles to turn the masses away from fossil fuels to cleaner Liquefied Petroleum Gas (LPG) the Pipelines and Product Marketing Company (PPMC) has said it will provide LPG skids in 21 deposits across the country. The agency, which is a subsidiary of the Nigeria National Petroleum Company (NNPC) hopes this will bring rural dwellers closer to the product. This in turn will reduce deforestation and help the environment as less use is made of fossil fuels like charcoal and fire-wood.
Other steps that PPMC is planning to take includes the restoration of the Apapa LPG facility and upgrading it from 4,000 metric tonnes to 7,000 metric tonnes. PPMC said the steps already taken have enabled much greater penetration of the LPG market and increased the accessibility of LPG to consumers.
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Delta Communities Appeal to Government Over Oil Spill From OML 40 Pipeline
Delta communities living in the area around oil mining lease (OML) 40 have sent an urgent appeal to the Federal Government in respect of the effects of an oil spill from a Nigerian Petroleum Development Company (NPDC) pipeline. The communities, which include the people of Baterentie, Batren and Deleketa say their waters have been polluted by a spill from the pipeline which ruptured on the 12th of October. They also complain that the contractor engaged by NPDC to stop the spill had made things even worse.
The communities say their health has been affected, with two people dead and others in hospital after drinking the water. Livelihoods have also suffered as a result after the pollution in the water killed the fish and other aquatic life as well as other animals that drank the water.
The communities claim that the pipeline is about 40 years old and is long past the recommended lifespan of 25 years. While many oil companies complain of pipeline vandalisation, environmentalists have long accused them of using obsolete pipeseline, which are easy to break, causing environmental devastation of the sort these Delta communities are complaining about.
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Total Partners with Universal Medicare Foundation for Host Community Health Programme
Total is partnering with the Universal Medicare Foundation to offer a free health programme for host communities in Ogba/ Egbema/Ndoni Local Government area of Rivers State. The programme, which will be available at the Ogbogu Hospital, will benefit 58 host communities.
The program for this year includes a comprehensive health program with components that will include consultations, surgery, pharmaceuticals, screening and eye defects.
In the past, Total's health care programme, has included HIV/AIDs awareness campaigns, malaria, prostate and cervical cancer awareness.
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NAOC - Provision of Charter and Operation of Medium Weight Helicopters
Nigerian Agip Oil Company Limited (NAOC) invites interested and prequalified operators to respond to the opportunity for the provision of charter and operation of medium weight helicopters. The scope of work includes the provision and operation of four (4) medium weight helicopters each of 12/15 seater capacity capable of onshore and offshore operations. Only tenderers who are registered with NJQS Product/Service category 30803: air transport services of passengers and freight shall be invited to submit technical bids. The closing date for this opportunity is 27th December 2013.
Addax - Provision of Equipment Rental and Well Engineering Support Services
Addax Petroleum Development (Nigeria) Limited invites interested and pre-qualified contractors to respond to the opportunity for the provision of equipment rental and well engineering support services. The contract is proposed to commence in the fourth quarter of 2014. The scope of work includes the provision of equipment rental and well engineering support services suitable for use in an onshore /offshore operation. Only tenderers who are registered with NJQS product/category other drilling services (3.04.99) shall be invited to submit technical bids. The closing date for this opportunity is 30th December 2013.
NAOC - Prequalification for EPIC for Tebidaba Produced Water Reinjection Project
The Nigerian Agip Oi Company (NAOC) invites submissions for pre-qualification for the bidders list for an EPIC contract for Tebidaba Produced Water Reinjection Project. Only qualified companies shall be invited to tender for the project. The closing date for the submission of pre-qualification documents is 3rd January 2014.
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Best wishes 
Remi Aiyela
Editor-in-Chief
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