Importance of full deregulation in a post- PIB (Petroleum Industry Bill) economy

The most topical issue in Nigeria’s oil and gas industry, ‘arguably the most vibrant in Africa’ right now is the Petroleum Industry Bill,(PIB) and the only reason it would come before full deregulation of the downstream oil sector is simply because it has being programmed to encapsulate the subject matter.

The PIB has since been approved by the federal Executive Council and has been forwarded to the National Assembly for proper scrutiny and ratification after which full implementation is expected. This report however takes a look at the prospects of a full downstream sector deregulation after the passage of the bill as well as its importance especially in the face of in-depth corruption currently ravaging the downstream oil sector by virtue of the Petroleum Subsidy Fund (PSF).

On January 1,2012 the Goodluck Jonathan led federal Government announced a shocking and unexpected stoppage to the Petroleum Subsidy Fund,(PSF) thereby signaling an immediate sharp increase in petrol pump prices across the country.

This action could be so described because the federal government seemed to have allowed an atmosphere for dialogue with the people as governments selected representatives made up specifically of the economic team and a few other notable individuals met with the peoples unelected representative consisting of the civil society groups, human rights activists and the media to discuss the all-knotty issue of subsidy removal/deregulation.

However the government’s action was sudden as it was generally presumed that dialogue on the matter was still ongoing, but the of that action is all history now. The action of  government was to signal moves towards deregulation of the downstream sector, but analysts were of the opinion that deregulation cannot achieve its aim when implemented in piecemeal and as such the removal of  fuel subsidy alone cannot address the issues and should have come at the tail end of the deregulation exercise.




Crude markets rejoice as oil prices sprint

World oil prices soared on Friday with traders lauding a $150-billion growth pact pushed through by the European Union after Italy and Spain lifted their opposition to it, analysts said.

Brent North Sea crude for delivery in August surged $4.07 to $95.43 a barrel in London afternoon trading.

New York’s main contract, light sweet crude for August spiked $4.51 to $82.20 a barrel.

“The optimistic news from the EU summit spread bullish signs across the oil market as crude oil prices rebounded strongly from recent losses,” said Sucden Financial Research analyst Myrto Sokou.

Crude markets were rejoicing after Spain and Italy withdrew their opposition to the deal which enabled it to be passed, said Justin Harper, market strategist for IG Markets Singapore.

Prices were up “primarily because of the summit and this positive news that came out,” he told AFP.

“Because the expectations were so low to start with, people really weren’t expecting anything to come out of it and we’ve got some positive development, obviously a lot of money, $150 billion (120 billion euros),” he added.

Earlier Italian and Spanish brinkmanship had ignited fears that the two-day summit aimed at paving the way for deeper economic integration and ending the long-running crisis would be derailed.



UNDP stakes $2m in Nigeria’s renewable energy project

THE United Nations Development Programme (UNDP) has deposited $2 million with the Bank of Industry, to encourage even private participation and local industries working on renewable energy projects.

The United Nations Resident Coordinator, Daouda Toure, made the disclosure in an interview with the News Agency of Nigeria in Abuja, yesterday.Toure, who is also the UNDP Resident Representative, said that beside renewable energy, the agency was also looking at other sources, such as biomass and solar energy.

“We are not only looking at renewable energy but at all the potential we have in Africa, be it in terms of biomass, solar energy, there is a huge potential that is still very much in tab.

Energy efficiency programme is an important programme to all of us and making use of energy efficiently will allow more coverage with what we already have,” he said.According to him, the main objective of the project is to improve the energy efficiency of end-use equipment used in residential and public buildings in Nigeria, which include refrigeration appliances, air conditioners, lighting, electric motors, fans, among others.

Toure said that the aim of project would be to strengthen the supervisory and recognised framework to promote energy efficiency.He explained that the project would go a long way in developing monitoring and enforcement devices, adding that UNDP would mount a sensitisation campaign to promote energy efficiency in Nigeria.

English: The United Nations Development Progra...

English: The United Nations Development Programme in Ukraine (Photo credit: Wikipedia)

The UN official noted that the activities to achieve the objectives were aimed at enhancing the abilities of stakeholders to exploit the potential of energy efficiency.He also disclosed that a pilot project would be conducted where one million compact fluorescent lamps would be distributed to residential and public buildings in Nigeria.The project will assist the government of Nigeria to put in place comprehensive energy efficiency policy and legislation.



Lawmakers demand immediate halt to spills in oil facilities

English: Political map of the 36 States of Nig...

English: Political map of the 36 States of Nigeria (English) Deutsch: politische Karte Nigerias (Englisch) (Photo credit: Wikipedia)

The Senate Committee on Petroleum (Upstream) and its counterpart on Environment and Ecology have said that multinational oil companies operating in Nigeria must work with the relevant regulatory authorities in the industry to curtail further spill incidents in offshore oil facilities.

Chairmen of the Committees, Magnus Abbe, and Bukola Saraki, who spoke in separate interviews in Abuja, said this was necessary to avoid incidents with more devastating consequences to the environment and the people.

The lawmakers spoke against the background of the massive spill  from the Bonga offshore oil field, which the Director General, National Oil Spill Detection and Response Agency (NOSDRA), Peter Idabor, says might be Nigeria’s biggest pollution in more than a decade.

The incident, which occurred on Dec. 20 in the 200,000 barrels per day (bpd) capacity Bonga facility, located about 120 kilometres off Nigeria’s waters, during a routine operation to transfer crude oil from the field’s floating production, storage and off-loading (FPSO) vessel to a waiting oil tanker, has so far spread to about 185 kilometres of the ocean close to Nigeria’s coastal areas.

Though Shell Petroleum Development Company Limited (SPDC) says about 50 percent of the 40,000 barrels of crude that leaked from the offshore facility has dispersed into the air, NOSDRA said aerial inspection of the affected area showed that wind is gradually blowing the oil towards the country’s coastal areas and the impact might be felt in a matter of days.

Bonga FPSO

Bonga FPSO (Photo credit: . Shell)

Mr. Abbe said the incident calls for an immediate review of the operational standards in the industry, pointing out that if nothing is done in that direction, the incident might be a child’s play compared to what might happen in future.

For Shell Nigeria Exploration and Production Company (SNEPCO), the Shell subsidiary operating yje facility on behalf of the Nigerian National Petroleum Corporation (NNPC) in partnership with Eni, ExxonMobil, and Total, Mr. Saraki said it must be prepared to take prompt steps to ensure that adequate compensation is paid to Nigerians affected by the incident.

Mr. Saraki decried the  lack of essential equipment and logistics by agencies responsible for the protection of the environment, particularly in difficult  offshore locations, saying a situation where the relevant agencies rely almost entirely on the oil companies for equipment, logistics and information control is not healthy for effective independent monitoring, assessment, and quick response during emergencies as well as enforcement of operational standards.