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Category: Oil and gas

  • Nigeria’s central bank urge FG to jettison fuel subsidy policy

    Nigeria’s central bank urge FG to jettison fuel subsidy policy

    Due to the high cost to the economy, the Central Bank of Nigeria (CBN) has stated that the Federal Government of Nigeria (FGN) should “abandon the current fuel subsidy policy.”

    Professor Adeola Festus Adenikinju, a member of the CBN’s Monetary Policy Committee (MPC), revealed this at the most recent meeting in July.

    Despite current bottlenecks, the Nigerian government has assured citizens that it will continue to subsidise petrol prices, as reported by It.
    “On the fiscal challenges confronting the country, there is an urgent need to abandon the current fuel subsidy policy,” Adenikinju stated. While the government may be hesitant to implement this policy during an election year, the government can compel NNPC Ltd to be more efficient and transparent.”

    “There is also a need for increased education and enlightenment of the costs of the subsidy on the economy, and on most Nigerians,” he added.
    He stated that the government must provide a means for the citizenry to cut its reliance on fuel usage. He said “Government should also ensure that the Compressed Natural Gas (CNG) programme designed to provide gas as alternative fuel for transportation is aggressively implemented. Improvement in electricity supply will also reduce the amount of fuel being consumed in the economy, and thereby lower the overall subsidy payment.”

    On the topic of inflation, he stated that Nigeria is not unique in inflation being experienced. He said, “All countries of the world are basically addressing same supply factors: energy prices, food prices and strong dollar. The measures being taken are same: to tighten monetary expansion. In Africa, Ghana, Egypt, South Africa, along with their counterparts in Emerging and Developing countries have revised upwards monetary policy rates a couple of times since the beginning of the year.”

    The Federal Government of Nigeria (FGN)  has estimated petrol subsidy payment at N6.72 trillion for full-year 2023. This was disclosed by the Ministry of Finance at the Public Consultative Forum on the 2023-2025 Medium-Term Fiscal Framework.
    In April, following the approval of a revised 2022 budget by the Nigerian Senate, there was an upward review of the budget amount for Premium Motor Spirit (PMS) subsidy for 2022 by N442.72billion, from N3.557 trillion to N4 trillion.
    The costs of fuel subsidy in Nigeria increased by 890% over a five-year period (2017-2021) in Nigeria even though fuel prices have only increased by 12.1%.
    Nigeria  reported a record-breaking fiscal deficit of N7.3 trillion in 2021 as actual expenditure of N11.69 trillion vastly exceeded its 2021 generated revenues of N4.39 trillion, for every N4 earned by the Federal government, it spent over N11.

  • Shell files appeal in court to challenge Jurisdiction over N700bn spill compensation

    Shell files appeal in court to challenge Jurisdiction over N700bn spill compensation

    The Shell Petroleum Development Company (SPDC) has challenged the Federal High Court in Yenagoa’s jurisdiction to hear a N700 billion oil spill compensation suit filed by residents of Bayelsa’s Aghoro 1 community.

    The residents of Aghoro 1 in Bayelsa’s Ekeremor Local Government Area sued SPDC in Federal High Court in Yenagoa over an oil leak from the oil company’s Trans Ramos Pipeline on May 17, 2018.
    When the case came up for hearing, SPDC’s counsel, Mr Michael Amadi, told the court that the oil company is contesting the court’s jurisdiction and intends to appeal to the Court of Appeal.

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    He also urged the court to put the case on hold pending the outcome of the interlocutory appeal, as required by the hierarchy of courts, because the Court of Appeal was already hearing SPDC’s appeal.

    However, despite the fact that the records claimed by the defendant’s counsel were in front of the court, trial judge Justice Isa Dashen stated that he had yet to go through them in order to keep up with the case’s developments.

    He claimed that he had the right to review the Court of Appeal’s procedures and records before the matter was put on hold.

    He postponed the hearing until October 19 to allow him to review the processes that had been filed with the court, and he stated that he would wait for the appellate court’s decision as required by the rules.

    On behalf of Aghoro 1 community at Ekeremor LGA, Bayelsa, the pantiffs are Mr Victor Akamu, Pastor Erebimienkumor Goddey, Mrs Jane Alex, Miss Edith George, Mr Israel Tomonye, and FASF Associates Ltd.

    They are seeking redress for the oil spill’s damages, claiming that SPDC’s offer of N33.49 million was a far cry from the N700 billion claim based on impacted area damage assessment.

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    Shell Petroleum Development Company, Shell International Exploration and Production BV, Attorney-General and Minister of Justice, and Nigerian National Petroleum Corporation are named as defendants in the suit.

  • OPL 245: Why Nigeria Lost $1.7bn Claim To JP Morgan

    OPL 245: Why Nigeria Lost $1.7bn Claim To JP Morgan

    Nigeria lost a $1.7 billion lawsuit on Tuesday against JP Morgan Chase, a US investment bank, over the transfer of proceeds from the sale of Oil Prospecting Licence (OPL) 245 in 2011.

    Nigeria claims that JP Morgan was “grossly negligent” in transferring funds paid by Shell and Eni to an escrow account controlled by a former minister, Dan Etete, who was convicted of money laundering in a separate case in France in 2007.

    Nigeria sought damages in the amount of $875 million paid to Etete’s company, Malabu Oil and Gas, in three instalments between 2011 and 2013, plus interest, bringing the total to over $1.7 billion.

    The lawsuit claimed that JP Morgan should have known about the transaction’s corruption and fraud, and that there were red flags that JP Morgan should have seen and stopped the transfers.

    It was unable to substantiate its claim.

    Payments “were suspected to have flowed,” according to the Federal Government’s lawyer, Roger Masefield.

    It claimed that JPMorgan broke its duty by allowing bank transactions in 2011 and 2013 despite “reasonable grounds” for suspicion of fraud.

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    Judge Sara Cockerill dismissed the claim in a 137-page ruling at London’s High Court on Tuesday, ruling that Nigeria had failed at the first hurdle because there was no evidence of a fraud against the country.

    She acknowledged that the Nigerian government could not prove that it had been defrauded, saying that while “JP Morgan would have done things differently” with the benefit of hindsight, “none of these things individually or collectively amount to triggering and then breaching” the bank’s duty of care to its client.

    Judge Cockerill stated that the bank was “aware of a risk” of fraud by the time the payments were made in 2013.

    “There was a risk – but it was no more than a possibility based on a shaky foundation based on the evidence.”

    In February, Masefield argued that Nigeria’s case hinged on demonstrating that there was a fraud and that JP Morgan was aware of the risk of fraud.

    The lawyer told the court at the time, “The evidence of fraud is just shy of overwhelming.”

    “Under its Quincecare obligation, the bank had the right to refuse to pay as long as it had reasonable grounds to believe its customer was being defrauded.”

    Quincecare is a legal precedent that states that a bank should not pay out if it believes the payment will defraud its client.

    The judge ruled that there had been no breach of Quincecare and that Nigeria had failed to prove its case.

    According to the Financial Times, a Nigerian official said the country was “naturally disappointed by the outcome of the judgement and will be carefully reviewing it before considering next steps.” The FRN will continue its fight against fraud and corruption, as well as its efforts to recover funds for Nigerians.”

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    According to the Financial Times, JPMorgan also reacted, saying, “The judgement reflects our commitment to acting with high professional standards in every country we operate in, and how we are prepared to vigorously defend our actions and reputation when they are called into question.”

    What started it all

    Etete awarded OPL 245 to Malabu Oil and Gas, an oil company in which he has a large stake, in 1998 as an oil minister under Sani Abacha’s military rule.

    Following Abacha’s death and the country’s return to democracy, successive administrations contested Etete’s rights to the field until a deal to end the impasse through a sale to Shell and Eni was reached in 2011.

    The oil giants paid about $1.1 billion for the block, and Malabu relinquished its interest in OPL 245, allowing international oil companies to buy it.

    The agreement would later lead to a criminal trial in Italy for alleged government corruption.

    However, the defendants were discharged and acquitted by a Court of Milan in March 2021, after a three-year trial.

    The Federal Government filed a lawsuit seeking a $1.7 billion award against JP Morgan Chase Bank, which facilitated the transaction, for allegedly failing to meet its Quincecare obligations when it transferred $810 million to Malabu from the OPL 245 sale proceeds.

    In the trial, a Nigerian legal team accused Mohammed Bello Adoke, the Attorney-General of Nigeria from 2010 to 2015 under former President Goodluck Jonathan, of corruption.

    Adoke, on the other hand, has always denied the allegations.

  • 25 ships discharge petrol, other items at Lagos ports

    25 ships discharge petrol, other items at Lagos ports

    On Thursday, the Nigerian Ports Authority (NPA) announced that 25 ships had arrived at the Lagos Port Complex to discharge petrol and other goods.

    The ships were discharging bulk wheat, general cargo, frozen fish, bulk salt, bulk fertiliser, base oil, container, steam coal, bulk gypsum, automobile gasoline, and petrol, according to the NPA’s daily Shipping Position.

    Between May 19 and May 28, 15 more ships are expected to arrive at the port, according to the authority.
    Bulk wheat, general cargo, frozen fish, bulk sugar, butane gas, and containers were among the items expected.

    It said 12 more ships had arrived at the port with base oil, bulk sugar, bulk wheat, frozen fish, soya bean meal, and petrol.

  • Navy arrests, seizes over 6 million liters of crude oil

    Navy arrests, seizes over 6 million liters of crude oil

    In weeks five and six of the exercise, the Nigerian Navy (NN) said its troops conducting Operation Daktar Da Barawo (OPDDB) seized over six million litres of crude oil and arrested 20 suspects.

    Commodore A.O. Ayo-Vaughan, Director of Information, Naval Headquarters, stated that the economic saboteurs used armed resistance between May 1 and 14, 2022.

    Such developments, he said, would not deter the Service from enforcing zero tolerance for economic sabotage and criminality in Nigeria’s maritime domain, particularly in the backwaters.

    “Over 6 million litres of products and stolen crude oil were seized and arrested during OPDDB Weeks 5 and 6, including more than 20 suspects, many of whom have been handed over for prosecution.

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    “The use of armed resistance by economic saboteurs and criminals, particularly at Okarki, a border community between Rivers and Bayelsa States, was also highlighted during the period under review.”

    “This development will not deter the Nigerian Navy from enforcing zero tolerance in Nigeria’s Maritime Environment, particularly in the backwaters,” he said.

    The operation, which was supposed to end after 30 days, was extended due to the gains and successes of Operation DAKATAR DA BARAWO in April 2022, in which the Nigerian Navy denied oil thieves over N10 billion worth of stolen crude oil and petroleum products.