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Group petitions multinationals over gas flaring, oil spillage



The Network Advancement Programme for Poverty and Disaster Risk Reduction (NAPDDRR), has petitioned International Oil Companies (IOCs) operating in Akwa Ibom State for gas flaring and oil spillage without commensurate measures to cushion the effects.

The National President of the group, Alhaji Al Mustapha Edoho disclosed this in an interview in Uyo, the state capital.

Edoho explained that the action became necessary following decades of gas flaring, oil spillages and environmental degradation caused by oil and gas exploration and exploitation activities by the IOCs.

He also expressed dismay at the exploration activities of the oil firms without any recourse to Environmental Impacts Assessment (EIA) analysis, saying “activities of the oil firms have seriously impacted negatively on people’s lives, environment and ecosystems.”

In his words, “We petitioned the oil firms demanding records of mitigation system to cushion the effects of gas flaring, oil spills and other environmental effects and what we got as responses are not satisfactory to us.

“The frontier Oil casually told us that gas flaring is a routine regime in their company operations to provide gas to ExxonMobil and others. The management of ExxonMobil just dismissed our petition as if they don’t owe anyone any obligation and that is why we are seeking redress in court.”

“ExxonMobil Unlimited has flared gas in Esit Eket and other oil-bearing communities in Akwa Ibom since 1970 till date without any remediation programme to cushion the devastating effects.

“Frontier Oil joined in such environmental unfriendly practice in 2012. So, as an environmentally-friendly organization, we have to commence action to compel these organisations to adhere strictly to internationally recognized standards in oil exploration activities to keep our environment safe.

“Our ecosystem have been destroyed, lives lost, farmlands and aquatic lives completely degraded by the activities of these firms without any commensurate compensation to assuage the feelings of the people of these communities.”

He blamed the government for being insensitive to the plight of the people of the oil-bearing communities of Onna, Ibeno, Eket and Esit Eket, alleging that, “the host government is only concerned with what it gets as tax from the IOCs without considering the negative impact of the exploration activities of the oil firms on the people and environment.

Edoho, therefore, urged the state government and other regulatory authorities to compel the IOCs to adhere to the international regulatory framework that guides operations of oil firms especially in a developing economy like Nigeria.

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FG insists Shell, Mobil, Chevron, others should pay $62 billion ‘arrears’



The Federal government has insisted that it would recover over $62 billion it claims as arrears of profits due it from 1998 under the production sharing contracts (PSCs) between the Nigerian National Petroleum Corporation (NNPC) and its joint venture partners.

The international oil companies have taken the matter before the Federal High Court in Lagos and are denying any liability.

The six international oil companies with joint operating agreements with the NNPC include Shell Petroleum Development Company, Mobil Producing Nigeria Unlimited and Chevron Nigeria Limited.

The others are Nigeria Agip Oil Company, TotalElf Nigeria and Pan Ocean Oil Company.

Under the terms of the 1993 PSC, the NNPC and the joint venture partners would review their profits sharing formula once crude oil prices rise above $20 per barrel.

But the Attorney-General of the Federation and Minister of Justice, Abubakar Malami, said this review has not taken place since October 1998 when oil prices rose above the stated threshold.

Recently, the government decided to trigger the review and demanded huge arrears of profits. But the joint venture partners have been reluctant to pay or adjust the profit-sharing formula in their various operating agreements.

Malami was unable to say exactly how much Nigeria is claiming from the oil majors but he estimated the amount in excess of $62 billion.

Since the claim by the Nigerian government, the six JV partners with the NNPC have filed a suit at the Federal High Court in Lagos to contest the allegations of violation of their PSCs and indebtedness.

“Regardless of the jurisdiction you look at, the case is about the rule of law and compliance with the prevailing laws; about rights and entitlements as they relate to the contract between the parties,” the minister said.

Apart from Shell, which holds 55 per cent equity in Shell/NNPC joint venture, the other five control at least 60 per cent of the interests in the shares.

In 2014, crude oil prices at the international market averaged $100 per barrel.

The minister said the IOCs told the court they were not liable to the payment because Nigeria made no formal attempt to activate the PSCs review clause after crude oil prices rose above $20 per barrel.

But Malami said government filed a counterclaim that the activation was automatic.

“The concern of the IOCs is about the establishment of their respective rights. A case has been established about the right of the government to enforce its laws. If indeed there exists such a right, then the remedy must naturally follow.

“What matters is the reconciliation of the figures. The government went to court for the purpose of ascertaining the liability and the validity of the calculations of the claims,” he said.

On the argument that government may have slept on its right by not enforcing the review of the PSCs immediately crude oil price rose above $20 per barrel, Mr Malami said it does not matter when the government decided to seek the enforcement of its laws.

He said as far as the PSC was concerned, it remained a function of law to activate the review at any time, so long as the law remained “valid, subsisting, applicable and enforceable.”

“The fact that government did not take immediate steps to demand the review and payment does not invalidate its action now to make a claim of right, provided the claim of right is rooted in law.

“As far as the Nigerian government is concerned, it is a function of law as to whether the review is automatic or not. The liability and responsibility of right are mutual and operative.

“The parties are in court to interpret if the review of the PSC was automatic, or whether the Nigerian government slept on its right by not activating the right to review the sharing formula when it became due.

“That is a function of judicial interpretation. That is why the parties are in court. The existence or otherwise of liability as far as PSC agreement is concerned is a function of law and the parties are in court to determine as a function of law,” he said.

On the timing of the claims, Malami said insinuations that the government was targeting and squeezing foreign companies for funds to pull the country out of poor fiscal condition was lacking in substance.

He said apart from the IOCs, the government was still pursuing its agenda to recover looted asset from individuals and groups at home.

On the impact of the claims on investment in the country, he said the government was conscious of its obligations to promote good investment climate with regards to the prevailing laws and their enforcement.

He said despite the ongoing court action, the parties have continued to meet, engage and discuss, saying he was optimistic the engagements would eventually translate to settlement or full-blown negotiation process.

On alleged threats by the IOCs to withhold decisions on further investments in Nigeria until the matter is resolved, the Minister said the government was not worried about any backlash by way of negative business sentiment.

He said the action will instead create a win-win situation for all parties.

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NNPC, NLNG seal $2.5 billion gas supply contract



The Nigerian National Petroleum Corporation (NNPC) has signed a $2.5 billion pre-payment agreement with the Nigeria Liquefied Natural Gas (NLNG) for upstream gas development projects to supply gas to Trains 1 to 6 of the plant.

The Group Managing Director of NNPC, Mele Kyari, at the signing, urged shareholders to expedite work and expand production capacity beyond Train 7 to take advantage of the huge opportunities in the global LNG market.

The signing of the gas supply pre-payment agreement was witnessed by the Country Chairman of Shell Companies in Nigeria, Osagie Okunbor, and representatives of Total, Eni/NAOC, amongst others.

The GMD said the agreement was significant as it would help in resolving the issues around gas supplies to Trains 1 to 6 of the plant.

He said there was a need to fast-track action on the process to bring more trains on stream.

“Here at NNPC, we are thinking beyond Train 7. If your ambition is Train 7, then you have to work hard to change that,” Mr Kyari told the shareholders.

Despite being a huge success story as a company, the GMD said the NLNG must go beyond its current achievements and initiate other viable projects capable of generating better returns on investment.

He said the partners should be concerned on what other projects they can quickly deliver to take advantage of the enormous gas potential in the country.

Besides, he said there was a need for the partners to take advantage of what is happening in the global market and do things very differently.

”There are opportunities in the global market our company must move fast into those locations,” he said.

The official said the pre-payment gas supply agreement was a milestone which aligned with the Federal Government’s aspirations of monetising the nation’s enormous gas resources.

He said the agreement will protect the federation’s investment in the NLNG; ensure full capacity utilisation, consisting 22 metric tons per annum (MTPA) of LNG and 5 MTPA of NGLs of Trains 1-6 plants; generate employment, and provide new vistas of growth opportunities in the nation’s LNG sector.

Earlier in his address, the Managing Director of NLNG, Tony Attah, said the signing of the gas supply pre-payment agreement was a significant step towards ensuring the company’s business sustainability and competitiveness.

Attah called for support to ensure the Final Investment Decision on the Train 7 Project is taken this year without fail.

He said the project was no longer an ambitious one in view of recent developments in the global LNG market.

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Banks grants only 4% loans to agriculture



Nigerian banks have given only 4.20 per cent of their total loans to the agriculture sector in the second quarter (Q2) of this year.

A total of N15.1 trillion was given as loans in the second quarter of 2019, out of which only N636 billion was given to agriculture.

The figures were disclosed by the National Bureau of Statistics (NBS) in a report on its website titled ‘selected banking sector’ data for Q2 2019.

The bureau said the data was supplied administratively by the Central Bank of Nigeria (CBN) and was verified and validated by the NBS.

There was also no significant difference in loans to the agriculture sector between Q1 and Q2 2019. In each, only 4.20 per cent of the total loans were given to the agriculture sector.

In the first quarter, a total of N15.2 trillion was given as loans with agriculture getting only N638 billion.

The Industry and Service sectors got the highest loans from Nigerian banks in the two quarters.

In the first quarter of 2019, Industry and Service sectors got 40.27 and 55.53 per cent of loans respectively, while in the second quarter, they were allocated 39.60 and 56. 20 per cent respectively.

To ensure Nigerian farmers are able to access loans, despite the lack of support from private banks, the central bank introduced the Anchor Borrowers Programme (ABP) in 2015. The ABP also aims to achieve financial inclusion by helping farmers have easy access to credit.

The loans are targeted at smallholder farmers engaged in the production of identified commodities across the country.

The farmers are expected to cluster in groups/cooperative(s) of between five and 20 for ease of administration.

The ABP programme, despite challenges, has contributed to a huge increase in the volume of local rice produced.

However, despite the efforts of the government, rural farmers still lament about poor access to credits.

An agricultural entrepreneur, Sola Fagorusi, in an interview said the allocation to the agriculture sector is not commensurate with the efforts to improve the sector.

He accused the federal government of not doing enough, making reference to the 1.6 per cent 2019 budgetary allocation to the sector.

“If the government is not matching the actions, so how do they make banks allocate better amount,” he said.

“Unfortunately, agriculture is a long term business and requires commitment. Four per cent will not take us anywhere,” he said of the bank’s loans to agriculture.

For an economist, Paul Alaje, the loan to the sector shows that agriculture is not a priority to both the government and the banking sector.

He said this is especially worrisome for a country like Nigeria that plans to diversify its revenue source from oil and gas to agriculture.

“We must find other alternatives to support agriculture. The facility will not support agriculture as we want it”.

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