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Welcome to our 84th issue. We apologise for our absence over the last two weeks due to some staff issues. Some new hires mean we can now be certain of getting your favourite weekly newsletter to you every Friday, come rain or shine. So remember to look out for NOGintelligence and all our new developments over the coming weeks.
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SIAO is holding a comprehensive 5 day workshop on
Accounting for Upstream Oil and Gas Operations Under IFRS.
The workshop will be held inDubai from the17th to the 21st of March.
Registration closes on the 10th of March.
For further information get in touch with David Raggay on 0817 510 3826 or email him at david.raggay@siao-ng.com. SIAO is a one-stop shop for audit and assurance, tax and advisory service. _________________________________________________________________
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Shell Shuts Nembe Creek Pipeline
Shell has shut the Nembe Creek Trunk oil pipeline after yet another oil theft attack. The vital trunkline has been targeted incessantly in the last few years. The company has not yet disclosed how much crude oil will have to be deferred as a result.
"We closed the Nembe Creek Trunkline on Sunday for the removal of crude theft points. We plan to complete the exercise and reopen the line as soon as possible," a spokesman for Shell Petroleum Development Company (SPDC) of Nigeria said.
The Nembe Creek trunkline, located in the Eastern part of the Niger Delta, normally transports 150,000 barrels of crude oil owned by SPDC, but is also used by third-parties.
The 97 kilometre pipeline collects crude oil from 14 oil pumping stations across the Nembe Creek, Krakama, Awoba, Ekulama and San Bartholomew oil fields and transport it to the Cawthorne Channel field and Shell Petroleum Development Company (SPDC) of Nigeria's Bonny Export Terminal for dehydration and export.
The Nembe Creek pipeline was refurbished in 2010 at a cost of about $2 billion. It was the largest single project under the SPDC joint venture's asset integrity programme that has replaced more than 1,000 km of major pipelines and flowlines in the last five years.
Shell said the pipeline was replaced in December 2010 at a cost of $1.1 billion but has been repeatedly targeted by crude thieves since it was commissioned.
Shell has previously said that they were losing more than 60,000 barrels of oil a day due to the production shut ins.
The Dutch multinational, which has been selling off assets in the Niger Delta and is currently looking to sell Oil Mining Leases (OMLs) 18, 24, 25, and 29, has thrown the pipeline in with the latest asset sell off.
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Heritage Oil Achieves 17 Per Cent Production Increase from OML 30
London Stock Exchange listed Heritage Oil has given a production update in which it reports that its year-to-date production from OML 30 has averaged approximately 15,600 barrels of oil per day net to Heritage. This represents a 17 per cent increase on last quarter's production figures.
Commenting on this latest update, Heritage CEO Tony Buckingham said: "OML 30 operations are progressing in line with expectations, providing significant revenues and cash flow to Heritage which should enable the company to achieve its goal of paying a sustainable dividend stream to shareholders. Our interest in OML 30 will be used as a platform to grow and obtain additional interests in Nigeria and in other core areas."
The company said it has achieved three liftings so far this year and expects future liftings to take place on a monthly basis. Other development work on the block includes the installation of gas compressors, refurbishment of equipment, statutory inspection and testing of all pressure vessels, and inspection of all wellheads and pipelines continue to support well optimisation. All of this the company says, will result in further increases in production.
The company also expects an improvement in its bottom line after concluding delicate negotiations with the government over the tax status of its joint venture vehicle, Shoreline Natural Resources. They expect this to be reflected in their 2013 results.
Commencement of development drilling is on track for the second half of the year.
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OPEC Daily Basket Price Stood at $106.10 a Barrel Thursday, 27 February 2014
The price of OPEC basket of twelve crudes stood at $106.10 a barrel on Thursday, compared with $106.49 the previous day, according to OPEC Secretariat calculations. The basket price has been on a downward trend since the 19th of February when it reached $107.15.
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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NNPC: No Fuel Scarcity
The Nigerian National Petroleum Corporation (NNPC) is continuing to deny the rumours that are circulating about an impending petrol price hike. NNPC Acting Group General Manager, Group Public Affairs Division, NNPC, Omar Farouk, had to act as queues were beginning to from at petrol stations in Abuja and other cities across the nation.
The Petroleum Products Pricing Regulatory Agency, PPPRA also confirmed that there was sufficient stockpile of products. PPMC spokesperson, Lanre Oladele joined Farouk in calling for the general public to resist the urge to panic-buy as there was sufficient stocks in depots across the country to last for weeks.
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House of Reps Investigates NNPC - Swiss Crude Traders Deals
The House of Representatives' has launched its investigation into dealings between the beleaguered Nigerian National Petroleum Corporation (NNPC) and Swiss Traders begin. The lawmakers are probing the crude oil deals between NNPC and its crude oil trading partners, particularly Vitol and Trafigura. The investigation comes after Swiss non governmental organization (NGO), Berne Declaration, accused Swiss traders of colluding with NNPC to defraud the nation of $6.8 billion in oil swap deals, an accusation denied by all the parties fingered by the report.
Giving evidence at the hearing, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Hajiya Zainab Shamsuna Ahmed, demanded full and transparent disclosure of all alternative funding arrangements in the audited financial statements (AFS) of NNPC.
Ahmed is pointing the finger at NNPC over a number of issues.
First, she made fresh allegations against NNPC stating that in their 2009-11 audit NEITI discovered $22.8 billion "off balance sheet items" which appear to have been hidden from NNPC's records. The items were from its alternative funding/financing arrangements with its Joint Venture partners in form of third party financing from external financial markets and Modified Carry Arrangement (MCA), which are loans from existing JV partners (international oil companies).
NEITI also says that NNPC diverted $1.73 billion that was earmarked for funding its joint venture (JV) cash calls/operations to non-cash call items, namely: security payments ($600,000,000), National Petroleum Investment Management Services (NAPIMS) management fees ($486,604,000) and expansion of ESCRAVOS Lagos Pipeline Project ($646,950,000). This meant that NNPC was not able to fund its JV cash calls.
Next, she would like to see the government review the allocation of oil to the refineries. She pointed out that the refineries are operating far below their name-plate capacity and yet they are being allocated 445,000 barrels of oil per day.
The Executive Secretary also called attention to the Crude Oil-Product Exchange deals popularly referred to as crude oil swaps. In these transactions, offshore processing facilities receive crude oil in exchange for refined products. Ahmed said the NEITI audit revealed that these arrangements are not economically beneficial when the processing fees, freight and in some cases, demurrage, are taken into account. She also reported $866,189,632.47 in under-deliveries.
Finally, the Executive Secretary also commented on the Berne Declaration report, saying the accusation of fraudulent crude oil swap deals worth $6.8 billionleveled against NNPC , saying the accusation has some substance.
Meanwhile, group managing director of the NNPC, Andrew Yakubu, in giving evidence called the claims "baseless and without material substance."
Before he was sent on suspension, former Central Bank of Nigeria Governor, Sanusi Lamido Sanusi had called for an end to the crude oil swap deals.
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Minister of Finance Calls for Independent Forensic Audit of NNPC Accounts
The Minister of Finance and Coordinating Minister for the Economy Dr. Ngozi Okonjo-Iweala has joined the call for an audit of the Nigerian National Petroleum Corporation (NNPC). She has called for urgent action with regard to an independent forensic audit of conflicting claims of unaccounted funds made by and suspended Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamdio Sanusi.
Okonjo-Iweala said: "My position on this has been clear from the start. The Ministry of Finance's reconciliation showed a shortfall of $10.8 billion in NNPC remittances to the Federation account. After this, the conflicting claims continued with new figures such as $20 billion being mentioned."
She said she had been calling for an independent forensic audit since 13th.
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Nigeria Oil & Gas Strategic Conference & International Exhibition (NOG 2014) Postponed
The annual CWC conference, the highlight of the Nigerian oil and gas industry calendar has been postponed. The annual conference had to be postponed due to a clash with the Centenniary Celebrations being hosted by the Federal Government in Abuja.
The conference and exhibition will now take place from from 17 - 20 March 2014 at the ICC, Abuja. CWC says it has been able to get the support and commitment from their partners, speakers, sponsors and exhibitors. As a result, the conference programme remains unaltered.
The company says it regrets any inconvenience caused by the programme change. have arisen.
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Nigeria Oil and Gas Conference
Abuja, Nigeria
17 - 20 March
www.cwcnog.com
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Best wishes 
Remi Aiyela
Editor-in-Chief
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