Expectation as oil, gas crisis welcomes new administration
Pockets of crisis in the oil and gas sector welcomed the administration of President Buhari amidst great expectations by Nigerians from the new government. According to the commentary by Centre for Petroleum Information (CPI): “Nigerians would not in a hurry forget the memorable transitional week characterised by what has been aptly tagged “energy paralysis:” permanent power outages in major cities and an artificial fuel scarcity”.
“Both events highlight the significant role of the oil, gas and power sector in fostering national wellbeing or doing the opposite, as in this case”, CPI added.
Industry expectations according to CPI are numerous. “Downstream, the issue of product availability at fair price must be addressed in a practical way without continuing with the current unsustainable model which fosters graft and exploits the populace; there is need to make the gas master plan work and strengthen the current weak but essential link between gas production and electric power generation; beyond the calls for restructuring, build an autonomous NNPC – like NOCs elsewhere – and sever the remote controls which reduce its top managers to puppets; promote sustainable energy and ensure transparency in oil and gas deals. Fifth, learn lessons from the oil price slide and build a more robust economy and reserves, reducing dependence on the petroleum industry”.
Amidst the paralysis, pockets of crisis heralded the new administration;
Fierce fuel scarcity shut down Nigeria
Weeks before May 29 handover date, Nigeria battled one of its worst fuel scarcity in recent times. The dire situation drove the pump price of the product in the few filling stations that had the product to sell at the product between N120 and N400 per litre.
The fuel scarcity crisis has been in effect for more than a month, leading to long lines at filling stations and a rise of an expensive black market for fuel.
The crisis kept many workers at home, unable to make it to work and crippled rural areas reliant on fuel and led to businesses shutting down with leading commercial bank sending out an email notice to its customers that it would be forced to close its branches at 1pm instead of the usual time of 4pm due to the fuel shortage.
The scarcity has also led to the cancellation of flights and the closure of radio stations. Telecommunication companies also warned that their services are likely to be affected by the unavailability of fuel.
Sale of OMLs 40, 42 triggered strike
About one week to May 29 handover date, the NNPC branch of the combined senior and junior staff unions: Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and National Union of Petroleum and Natural Gas (NUPENG) joined their counterparts at the NPDC, (the operating subsidiary of the state hydrocarbon company NNPC), to embarked on strike which shut down Nigeria’s oil and gas sector over the decision by the Jonathan government to award the operatorship of Oil Mining Leases 40 and 42 to Elcrest and Neconde Oil companies respectively.
The oil industry employees union joined the strike to reverse the last minute Jonathan government’s highly controversial decision.
PENGASSAN and NUPENG members from all the NNPC business units, including the Products and Pipelines Marketing Company (PPMC), the three refinery companies, the Integrated Data Services Limited (IDSL), the National Engineering and Technical Company Limited (NETCO) and the Nigerian Gas Company took part in the strike.
NPDC staff had shut in most of the oil fields in four acreages: OMLs 40, 42, 30, 34 and 26, as they began full scale strike action Friday, May 15, 2015.
Neconde and Elcrest, who are independents, purchased 45 percent stakes in OMLs 42 and 40 respectively from Shell, TOTAL and ENI in 2012, but the operatorship of the assets were not granted with the purchases. The government company NNPC instead invoked its rights to operatorship of the assets, and assigned those rights to NPDC, its subsidiary.
For most of the last three years, Neconde and Elcrest, along with First Hydrocarbon Limited, Shoreline Resources and NDWestern, who bought similar stakes in OMLs 26, 30 and 34 between 2011 and 2012, have lamented NPDC’s lack of capacity to continue as the operator of the acreages they purchased from the Shell-led consortium. Their argument is that they could have gotten more production out of the fields than NPDC was doing as operator.
Nembe youths shut down flow stations
Youth from the oil rich Nembe local government area in Bayelsa State shut down two flow stations belonging to the Shell Petroleum Development Company (SPDC). The flow stations run along Nembe Creek 1 and 2 of the LGA.
The two facilities that are estimated to produce over 600,000 barrels of crude oil per day were invaded by the agitated youths. The facilities were switched off by the protesters.
The protesting Nembe indigenes, carried placards expressing their anger, many saying “the sale of our wealth by shell is theft against mankind”, “we are angry, and will no longer take it”, “enough of neglect and inhumanity”, and “Nembe people reject sale of oil field.” The youth accused SPDC of neglect and deceit of the signed Global Memorandum of Understanding (GMoU).
They alleged that despite the peaceful disposition of the Nembe people to peaceful oil exploration activities for over 50 years, the company has failed to fulfil their promise of electricity, water, and good health facilities.
The protesting youth met resistance from security operatives including armed soldiers at Nembe flow station 1. They stopped them from invading the complex, but the youths succeeded in shutting down the flow station.
Oil union battle Halliburton over job cuts
National Union of Petroleum and Natural Gas Workers (NUPENG) shut down the local operations of US oilfield services provider Halliburton Co in protest against job cuts.
Tokunbo Korodo, Lagos chairman for the National Union of Petroleum and Natural Gas Workers (NUPENG), said the group halted operations saying it was opposed to Halliburton’s decision to sack 46 local staff members. The union accused Halliburton of not following due process.
Halliburton’s staff cuts in Nigeria are part of a company-wide jobs cull announced earlier this year to counter a sharp downturn in global oil prices since last summer that has shrunk profits.
However, the strike was called in less than 48 hours after it commenced.
In April, the company, which provides drilling services to Royal Dutch Shell PLC and Chevron Corp in Africa’s top oil producer, said it had cut 9,000 jobs, or about 10 percent of the global workforce, and that more were planned.
Niger Delta groups shut down ENI’s oil facilities
Two oilfields run by Nigerian Agip Oil Co. Ltd, a unit of Italian oil major ENI, were shut down in the Niger delta region by local communities over disputes with the company, the protesters said.
Oil production in the delta has often been disrupted by locals frustrated at the lack of development in their communities.
One group represented by the Agrisaba Oil and Gas Committee said it had shut down an oil facility in the Nembe 5 region following disputes, including over the provision of jobs for locals.
Separately, the Egbebiri community shut down six wells at the Idu oilfield, two members said, citing various grievances, including an allegation the company owed money for the guarding of its wells since 2014 and that it had failed to pay compensation for oil spills.
The Egbebiri shut down the same oilfield last year for similar reasons.
It was not clear how much oil overall output was impacted by the two shutdowns.
FRANK UZUEGBUNAM