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MN; From April 08. But the link doesn't work anymore.
I can't imagine why, but when I sang this song this morning, I thought of this stock
. Maybe because I've been holding 10 years and counting. http://www.singsnap.com/snap/r/ab99da2a
MN; I Believe This Is Your 2nd ERHE Song. I think you did one quite some time ago. Could you post a link to your older song?
Thanks
FG: China’s $50bn Oil Offer Still on Course
By Chika Amanze-Nwachuku with agency report, 12.09.2009
China has not given up on its attempt to become a player in the Nigerian oil industry. Consequently, the $50 billion offer to the Federal Government to enable it acquire 49 per cent stake is still on the table. This translates to some six billion barrels in oil reserves. Several state-run Chinese oil firms, including the China National Offshore Oil Corporation (CNOOC) are currently in talks with the government to advance the Asian country’s interests. Their business proposals include incursions into some oil blocks held by Royal Dutch Shell. The Presidential Adviser on Energy Matters, Mr. Emmanuel Egbogah, said the deal which was proposed in June could help the country fund its joint ventures with oil majors. “Chinese people are not buying fields... they want to acquire reserves in Nigeria. Specifically the application was to acquire reserves of six billion barrels which we are currently discussing,” Egbogah explained on the sidelines of an energy conference in New Delhi, India. “They are prepared to spend as much as $50 billion,” he told Reuters. He also said that the country’s inability to fund its joint ventures with International Oil Companies (IOCs) had negatively impacted capital expenditure requirements for increasing production levels from the existing joint venture fields. He disclosed that Nigeria’s funding shortfall had steadily increased to $6 billion from a few million dollars when joint venture arrangements were created in the early 1970s. The funding shortfall has forced Nigeria to consider alternative ways to bridge the gap. Shell, ExxonMobil and Total have all had to provide billions of dollars in bridge financing to the Nigerian National Petr-oleum Corporation (NNPC) to plug funding shortfalls. Egbogah however affirmed that the Petroleum Industry Bill (PIB), expected to be passed into law this month, would address a lot of problems faced by the industry. Reuters quoted unnamed industry executives as saying that Nigeria is using the spectre of a Chinese bid for its oil as leverage in difficult contract renewal negotiations with its existing Western oil partners. Minister of State for Petroleum, Mr. Odein Ajum-ogobia, had in September stated that China would not be given all the reserves it was seeking. But the NNPC could sell stakes in joint ventures with existing oil partners if Beijing offered the right price. THISDAY had reported that CNOOC recently made a $50 billion offer to the Federal Government under the auspices of Sunrise Consortium. The report was being given consideration as instructions had gone out for the data on the blocks to be released to Sunrise by the Department of Petroleum Resources (DPR). A negotiating committee was said to have been set up in NNPC to handle discussions with the company. The committee is to consider the request and determine an optimum price for the reserves in the blocks. The IOCs had expected the automatic renewal of licences that expired last year. But the Federal Government stalled that move, preferring to renew them for only one year in order to take into account the realities of the present times with the passage of the PIB. After intense horse-trading, the Federal Government last month renewed three shallow water oil licences jointly operated by the NNPC and ExxonMobil, granting the US energy giant leases a further 20 years with the option to renew again. Other western oil companies including Shell, Chevron and Total have commenced negotiation on their oil licences as well as new deals ahead of the passage of the PIB. In a related development, a pipeline feeding the Nigerian crude grade Qua Iboe has ruptured, according to West African crude trading sources. The unnamed pipeline, according to a source, is able to feed between 120-140,000 b/d to the crude grade. He said the cause was unknown but was "apparently not sabotage." Qua Iboe is one of Nigeria 's key crude grades and produces around 400,000 b/d, according to Qua Iboe terminal operator ExxonMobil.
FG: Our Hands are Tied on Gas Flaring for Now
From George Oji in Abuja, 12.07.2009
The Federal Government has said that any attempt at stopping gas flaring through legislation now will lead to very unpleasant circumstances, which the nation can hardly cope with.
Such action, it said, would lead to the loss of billions of dollars derivable from carbon credit.
Minister of State for Petroleum, Odein Ajumogobia (SAN), disclosed this at the weekend in Abuja while fielding questions from some State House correspondents.
He said 80 per cent of the nation’s current revenue comes from the production and export of crude oil and as a result, legislating against gas flares would mean the loss of huge revenue from the carbon flare penalties.
In an apparent reference to the December 2010 deadline set by the National Assembly to halt gas flaring by oil companies operating in the country, the minister stated that the best approach at dealing with the problem is to work out systematic framework to ensure that gas would be used to power electricity generation and other forms of industrial uses.
Ajumogobia said the Federal Government had in the past opposed legislation against gas flares because such actions could lead to the shutting down of crude oil production and ultimately loss of revenue to the country.
After several threats to shut down oil fields that flare gas, the government might have realised that this could collapse the country's crude oil production.
The minister regretted that gas flaring had continued in the country because of the limited use of the gas being flared.
“For one, you can’t legislate flares out other than shutting down production. If you legislate it as a law abiding citizen, I will have to direct DPR on the date the law takes effect to direct these people to shut in their wells so that there will be no more flaring but there is no fundamental reason if you legislate an activity for which you can get carbon credit otherwise you deny yourself the carbon credit.
“So if flare out becomes a legal obligation, you can’t get any benefit from the carbon credit scheme. So we will be losing billions of dollars potentially in carbon credit that we can derive,” Ajumogobia said.
According to him, one of the short-term measures embarked upon by his Ministry to address the problem was to direct the shutting in of the oil fields where the gas being produced and flared was considerably more than the crude oil produced. Through this means, he said, the nation has been able to reduce gas flares from 2.5 billion cubic metres to current 1.5 billion cubic metres.
As a long-term measure Ajumogobia disclosed that his Ministry was currently working hard through the gas master plan to ensure that by the end of the first term of the current administration gas flaring would have been a thing of the past.
Speaking on the planned probe of the downstream sector of the economy to unearth the huge resources spent on petroleum subsidies over the years, he said he was positive not much would come out of from the planned probe.
“I personally felt it is going to be a futile exercise because people are dealing with documentation. When you bring in oil and it has been consumed what you have is paper work and if the paper works look right it is going to be difficult. I don’t expect the audit to disclose that this is the situation. If you tell me to go and bring petrol and I bring, just take a number say N5 billion and distribute it and you haven’t paid me and you tell me to go and bring more, I think a normal person that is making normal profit would say what about my N5 billion before we start talking about a new one.
“But if I go and bring some more then there is something odd to it to a point that I keep on doing it to a point you accumulate N30-40 billion and then I come to you and say I can’t pay this 40 billion and you say okay pay me 25 billion. I mean it suggests that something is wrong but when you look at the paper work, it is calculated, the exchange rate, volume, fright rate. Everybody would give the highest exchange rate even if it happens under a different excha-nge regime. that is why they can give a discount because they know how much they bought it. So when they use the highest, that highest exchange cost can represent N5 billion given the volume when we argue and argue they say we can give you N5 billion discount,” he said.
Nigeria was among over 160 nations that met in Kyoto, Japan, from December 1 to 11, 1997, to negotiate binding limitations on emission of gases, pursuant to the objectives of the United Nations Framework Convention on Climate Change of 1992.
The outcome of the meeting was the Kyoto Protocol, which came into force in February 2005, and in which the countries agreed to reduce emissions from 1990 levels by six per cent during the period of 2008 to 2012.
Consequently, the Federal Government gave 2008 as the deadline for all the oil companies in the country to build gas-gathering projects to stop gas flaring.
However, the companies could not meet the deadline as they argued that the Niger Delta crisis and inadequate funding could not allow them build gas-gathering projects in the oil-rich region.
The oil companies have insisted on 2012 as the new deadline to eliminate gas flare from old oil fields, and pledged to put measures in place to ensure that no gas is flared in upcoming fields.
Following the failure of the operators to stop gas flares in the old oil fields, the government recently increased gas flare penalty from N10 for every 1,000 standard cubic of gas flared to $3.50 per 1,000scf.
After several threats to shut down oil fields that flare gas, Acting Director of Petroleum Resources (DPR), Mr. Billy Agha, said recently that the Federal Government had not given a new deadline but was trying to look at all the fundamentals that would enable the operators to flare down or flare out
Oil prices are within 'right range', says Saudi's minister
CRUDE oil prices are in "the right range" and there is no need to reduce inventories, Saudi Arabian Oil Minister Ali al-Naimi said ahead of an Organisation of Petroleum Exporting Countries (OPEC) meeting scheduled for later this month.
"Inventories are coming down, the price is perfect, and all investors, consumers, producers - they're all very happy," Al-Naimi said at the weekend in Cairo, where Arab oil ministers are holding a yearly meeting.
Algerian Oil Minister, Chakib Khelil, said it will be "some time" before oil production will have to increase. OPEC, which supplies about 40 per cent of the world's oil, cut crude production last year as the global recession curtailed demand.
Oil prices have risen 69 per cent this year, recovering from a low of $32.40 a barrel in December 2008. OPEC announced that month a record production cut as demand around the world crumpled, and kept quotas unchanged at three subsequent meetings this year.
As OPEC prepares for the December 22 meeting in the Angolan capital Luanda, signs of a global economic recovery are buoying prices around the $75 mark deemed by many members and King Abdullah of Saudi Arabia, OPEC's biggest producer, as satisfactory. Crude closed at $75.47 a barrel on the New York Mercantile Exchange on Friday.
"The market is stable right now, volatility is at minimum, everybody is happy with the price, it is in the right range," al-Naimi said. "There is nothing to worry about."
Kuwaiti Oil Minister Sheikh Ahmed Al-Abdullah Al-Sabah said at the weekend in Cairo he expects OPEC members will agree to leave oil production quotas unchanged and said he was "comfortable" with oil prices of $70 to $80 a barrel. Officials from Algeria, Libya and Qatar, speaking today and yesterday, also said OPEC should maintain current production targets when it meets in Luanda.
Al-Naimi, Khelil and Sheikh Ahmed are in Cairo at the weekend to attend a yearly meeting of the Organisation of Arab Petroleum Exporting Countries, which brings together officials from Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, Tunisia and the United Arab Emirates. Seven OAPEC members are also members of OPEC, accounting for about two- thirds of OPEC's supply.
The 11 countries with OPEC production quotas pumped 26.5 million barrels of crude a day in November, 1.655 million above their collective target, a Bloomberg News survey showed December 1. Output from all 12 members, including Iraq, rose to the highest level in 11 months.
Russia, which is not an OPEC member, will send a minister to attend OPEC's meeting in Luanda as an observer, the chairman of Libya's National Oil Corp. Shokri Ghanem, told reporters on Friday.
retep; If Reports Are True That Within A Few Weeks We Will Know What Is Under The Ground, We Will Find Ourselves @ That Long Sought After Goal Of $1.
Rambus" Link Please. eom
*Big Ticket Projects & Niger Delta Development
By Ifeatu Agbu
Lately, the Federal Government is beginning to demonstrate what could pass for a genuine eagerness to transform the long-neglected but oil-rich Niger Delta region. It started on a good note by granting unconditional amnesty to repentant militants, thereby creating a peaceful environment for any meaningful development to take place. This important first step has been largely successful as the creeks are now safer and the frequent attacks on oil installations have virtually stopped.
Determined not to take the wind out of the sail, President Umaru Musa Yar’Adua is gradually unfolding his post-amnesty plan for the region. Just as many critics were asking what next, the President signed a N33 billion contract with Messers Julius Berger Plc and Team Nigeria Ltd (Consultant) for the completion of the remaining 22km Ajokuta-Warri rail line and the comprehensive rehabilitation of the completed portion. This is coming 22 years after the project started. The Minister of Transport, Alhaji Isa Bio said the contract award is a demonstration of the government’s commitment to the rapid transformation of the Niger Delta Region.
Similarly, the Federal Executive Council (FEC) recently approved N179.13 billion for the execution of 44 projects by the Niger Delta Development Commission, NDDC, in the nine states it covers. The projects include construction of bridges, roads, drainages, hospitals and the acquisition of hospital equipments, provision of potable water and educational facilities. ( Continues below….. )
Among the ambitious projects that the government has lined up are the completion of the expansion of the East-West highway; the construction of the East-West coastal road from Calabar to Lagos; the coastal rail line; Inland water ways transportation; reclamation to link some oil-producing communities and environmental clean-up activities. The projects also include a N14.9 billion contract for the development of the newly established Federal Polytechnic of Oil and Gas, sited in Bayelsa and another N5.72 billion for the upgrade of the Petroleum Technology Institute (PTI) sited in Effrum.
This is a significant departure from the previous half-hearted approach to the massive developmental challenges in the region the produces over 90 per cent of the wealth of the nation. It remains to be seen how fast the government is willing to move to actualize these projects.
Taking on the big ticket projects will certainly make a huge difference on the deplorable state of affairs in the oil-rich region. It also aligns with the broad vision of those who believe that the region deserves a Marshall Plan treatment; that bold strategy that revived Europe after the devastation of the Second World War. Since we don’t have such a grand plan yet, the Niger Delta Regional Development Master Plan will suffice, as it outlines a holistic approach to the challenges posed by the deleterious effects of oil exploration and exploitation in the region.
While the government tries to shift emphasis from what it terms small projects to mega projects, it needs to carefully consider the whole concept of big and small. There is need to strike a balance between the big projects that would take many months and even years to complete and the small ones that would quickly address the urgent needs of a people who are eagerly looking forward to seeing concrete development.
In essence, the concept of mega projects must be clearly defined to ensure that the ultimate goal of rapidly and comprehensively transforming the delta region is achieved. In fact, mega projects should not just be about roads, bridges and rail lines. What happens to schools, hospitals, electricity and water projects? These may be small projects, but they are essential components of the region’s development process. The Master Plan, accepted by all stakeholders as the way forward, provides a fine blend of mega and small projects required for the quick transformation of the region. This widely acclaimed roadmap for the region took four years to produce by national and international experts.
Indeed, it is a worthy compass that should be adequately funded in order to translate the lofty plans into tangible projects and programmes. For instance, a coastal road proposed in the plan to run from Calabar to Lagos, is estimated to cost about N300 billion. Obviously, such huge projects call for collaborative efforts of all the stakeholders.
Since the Yar’Adua administration, like its predecessor accepted to work with the Master Plan, the Niger Delta Development Commission, NDDC, which is facilitating its implementation, should be adequately funded to deliver on the critical sectors outlined in the plan. If all the stakeholders, which include the three tiers of government, oil companies, international donor agencies and the NDDC, were to put their hands on the plough, all sectors would be developed simultaneously without having to place emphasis on the size of the projects. In several cases, small is deemed beautiful in meeting the basic needs of the populace.
Incidentally, all the stakeholders come under the umbrella of Partners for Sustainable Development [PSD] Forum. According to the Managing Director of the NDDC, Mr. Chibuzor Ugwoha, “the PSD Forum, which is a direct product of the Master Plan, is a platform for collaboration amongst the development stakeholders of the Niger Delta region”, He noted that the body serves as a clearing house of information during project planning, budgeting and implementation. “It ensures that stakeholders harmonize their activities to avoid undue duplication of efforts and waste of resources”.
Such collaborative efforts, which derive from the Master Plan, are essential in the quest for sustainable development in the Niger Delta. The 29- kilometre Ogbia-Nembe road being built by the NDDC in partnership with the Shell Petroleum Development Company [SPDC] is one good example of the kind of team work required to turn things around. The N9.6 billion project illustrates the kind of challenges confronting the Niger Delta. It cuts through the swamps with nine bridges and 99 culverts. The terrain is such that four metres of clay soil has to be dug out and then sand-filled to provide a base for the road. This road is going to an area in the Niger Delta that was written off in the past as one of those areas that would never be linked with motor way because of its difficult terrain.
If all the stakeholders were to play their roles appropriately, there would be little to complain about and the distinction between mega, medium or micro projects would not be necessary. It is unfortunate that many states and local governments in the region have been misapplying the funds meant for such basic amenities as potable water, hospitals and schools. They should be held accountable for the funds they receive. Mere tokenism is no longer satisfactory to Niger Deltans.
It is only recently that the Rivers State government, for example, took up the challenge in earnest and started building multi-billion model primary and secondary schools, as well as state-of-the-art hospitals in all the local government areas of the state. Sadly, this appears to be an exception as most of the other states are still lagging behind. The Rivers example needs to be replicated in all the Niger Delta states, so as to free the interventionist agencies to concentrate on regional projects that would rapidly improve the lives of the people.
The Speaker of the House of Representatives, Mr. Dimeji Bankole was not far from the truth when he accused the governors from the south-South region of squandering resources meant for the development of their domain.
Bankole said that even though Nigeria had not been fair to the Niger Delta, which has been producing the funds with which a city Like Abuja was built, the region, should however, hold their leaders responsible for their woes. He also said that with the huge amount of money the Niger Delta States collect from the Federation Account, there was no reason why the quality of governance in a state like Lagos should be better than what is obtained in the Niger Delta states.
Mr. Ifeatu Agbu writes from Port Harcourt.
Look At The Chart For The Last 5 Years. We are in the normal downtrend for this time of year. Without big news we are just in Situation Normal.
Angola pledges to help Sao Tome and Principe in the oil sector [ 2009-11-19 ]
Sao Tome, Sao Tome and Principe, 19 Nov – Angola’s has promised to help Sao Tome and Principe in the oil sector, under the terms of a memorandum of understanding signed Wednesday in Sao Tome which outlines a new model for cooperation between the countries.
The memorandum, which has over five pages, and is the result of three days of negotiations, outlines the hosting of an annual summit between the heads of government of both states.
The mixed commission will take place every three times a year, although a technical meeting will be arranged annually to assess the fulfilment of agreements.
The Sao Tome and Angolan delegations also outlined in this memorandum the areas of economic, financial, defence and security, domestic order, agriculture, fisheries, infrastructures, sport and the media as being a priority.
Differently to the initial information announced by the negotiators of the seventh mixed commission for cooperation between Sao Tome and Angola no agreement was signed by the two sides.
The two delegations set the next meeting of the mixed commission for the start of January 2010. (macauhub)
OPEC foresees world oil demand rise by 700,000bpd
By Sulaimon Salau with agency reports
A DRASTIC increase of about 700,000 barrels per day in global oil demand is being expected next year, the Organisation of Petroleum Exporting Countries (OPEC) has foreseen, thus putting in place measures to tackle the challenge.
OPEC Secretary General, Abdullah Al-Badri, made the disclosure amid available statistics regarding the gradual return of demand growth after two years of contraction.
Al-Badri, forecasting world Gross Domestic Product (GDP) growth at 2.7 per cent next year, up from an earlier forecast of 2.3 per cent in July, observed that China and India may lead global economic growth next year.
He said: "There are signs that overall global demand contraction will ease in the fourth quarter. The consensus is that oil-demand growth will return after two full years of contraction. Oil demand growth will gradually rise to 1.2 million bpd by 2013.
"Most of this demand growth will again be in non-OECD countries, with transportation, industrial and petrochemicals leading the way," Al-Badri stated.
OECD countries, he said, would contribute 0.5 per cent of global economic growth, while emerging economies like China and India would lead the way with expected 2010 growth rates of 8.5 per cent and 6.5 per cent respectively.
"All these indications are in line with OPEC's expectations. While we remain cautiously optimistic, there are signs that we are moving into positive territory in 2010," he said, adding that "but we recognise that there are still many challenges ahead."
Badri said the oil cartel was well positioned to meet sudden supply disruptions and would continue to maintain spare capacity of about six million bpd.
"And while non-OPEC supply is growing, OPEC continues to invest in capacity in order to ensure that there will be ample supply to meet consumer needs in the future," he added.
Badri stressed that the changing regulatory environment set in motion to help countries across the world to respond to the financial crisis would require some adjustments.
A U.S. Federal Trade Commission rule which took effect last week was expected to hit energy traders and companies with fines of up to $1 million daily if they manipulate the oil markets. The oil fine was just $11,000.
The OPEC scribe hinted that the organisation was keeping an tab on uncertainty over impact of the pending environmental legislation.
Meanwhile, the EIA in its November 2009 Short-Term Energy Outlook (STEO) had predicted that OPEC members could earn $576 billion of net export revenue in 2009 and $750 billion in 2010.
Last year, OPEC earned $966 billion in net revenue, a 42 per cent increase from 2007. Saudi Arabia earned the largest share of these earnings, $285 billion, representing 30 per cent of total OPEC revenue.
On a per-capita basis, OPEC net oil export earnings reached $2,676 in 2008, a 40 per cent increase from 2007.
Meanwhile, the weekly average prices of OPEC showed a high frequency of price changes last week. On the five trading days from Nov. 2 to Nov. 6, OPEC oil prices fluctuated wildly, ranging from U.S. $74.95 per barrel on Nov. 2 to $77.60 on Nov. 4, only one cent lower than the highest record this year. However, it dropped to $76.25 on Nov. 6. It was the second time that OPEC weekly average oil prices had been maintained above $70 a barrel for four consecutive weeks since August.
But the price only saw a weekly increase of $0.33. last week, the Vienna-based cartel said. Data from the U.S. Energy Information Administration (EIA) showed that U.S. commercial crude oil inventories decreased by nearly 3.94 million barrels due to reduced imports, pushing the international oil prices up to a high level last Wednesday.
The U.S. unemployment rate climbed close to 10 per cent and the Federal Reserve announced its decision to maintain the benchmark overnight lending rate at a very low level.
These messages suggested that the U.S. economic recovery was very fragile, which largely suppressed the oil prices and led to a sharp decline in international oil prices on last weekend.
In the context of a fragile economic recovery across the world, some OPEC members believed that current international crude oil supplies in the market remained in surplus and therefore it should not increase oil production, though the oil price has doubled this year.
As Oil prices fall below $79 ahead of U.S. supply report
OIL prices fell below $79 a barrel yesterday amid signs that U.S. crude demand remains weak and as the dollar strengthened, making commodities like oil more expensive for international investors.
By early afternoon in Europe, benchmark crude for December delivery was down 74 cents to $78.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 23 cents to settle at $79.28 on Wednesday.
Oil has bounced between $76 and $81 for about a month as high U.S. crude inventory levels fuel investor doubts about a recovery in consumer demand.
The American Petroleum Institute said Tuesday that crude supplies rose last week, and traders will be closely watching the Energy Information Administration's inventory report later yesterday.
"Crude is encountering a lot of resistance at the $80 level because of the supply overhang and no clear signs of demand growth coming back in the U.S.," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
"People talk about a jobless economic recovery. This has been a demand-less oil rally."
Shum's view was reflected in a monthly report on oil markets released by the Paris-based International Energy Agency, which said continuing low U.S. demand for diesel - strongly correlated to economic activity - cast doubts on how much more crude would be needed in the world's largest economy.
"It would seem that the 'real' U.S. economy, as opposed to the financial one, is struggling to recover, despite the end of the recession," the IEA said in its report.
At the same time, the IEA increased slightly its forecast for global oil demand to 84.8 million barrels a day in 2009, 1.7 per cent or 1.5 million barrels less than last year. In October, the agency's forecast for 2009 was of 84.4 million barrels a day.
Global demand was also seen improving in 2010 to 86.2 million barrels a day, 500,000 barrels a day more than in last month's report.
Oil has risen from $32 a barrel in December amid a surge in global stocks and a falling U.S. dollar. The Dow Jones industrial index rose 0.4 per cent Wednesday, but stock indexes in Asia and Europe were mostly lower yesterday.
Oil and other commodities like gold, which are priced in dollars, become cheaper to investors holding other currencies when the dollar weakens, but are less attractive when the dollar gains.
The euro was down to $1.4946 yesterday from $1.4976 late Wednesday in New York.
"(U.S. benchmark) WTI continues to be a price for the dollar rather than a price for crude oil," said analyst Olivier Jakob from Petromatrix in Switzerland. "We are less than certain that these fundamental inputs will be able to have more weight than the volatility of the dollar index."
In other Nymex trading, heating oil was steady at $2.06 a gallon. Gasoline for December delivery rose 0.73 cent to $2.00 a gallon. Natural gas for December delivery fell 1.2 cents to $4.49 per 1,000 cubic feet.
In London, Brent crude for December delivery fell 57 cents to $77.38 on the ICE Futures exchange.
Construction in Nigeria ‘to become World’s Fastest Growing’
By Bennett Oghifo with agency report, 11.13.2009
Construction growth in Nigeria will be the fastest of all markets, according to the latest 10-year forecast from Global Construction Perspectives and Oxford Economics.
The new study says China will overtake the US as the world’s biggest construction market by 2018, but that the fastest growth will happen in Nigeria.
The survey said infrastructure is the hottest sector to be in and that "it is set to grow in emerging markets by a staggering 128 per cent from now to 2020, compared with just 18 percent over the same period in developed countries”.
The report, which named Nigeria “global hotspot from here to 2020” says the nation's construction growth is even faster than India's, reflecting increased wealth and urbanisation resulting from the country’s oil production.
"Its population of approximately 154 million is urbanising at one of the fastest rates in the world, but construction is now only 3.2 percent of GDP," it said.
It stated that from 2009 to 2020, only Nigeria and India will enjoy higher growth rates than China in their construction output, but that despite India’s continued construction boom, China’s market will still be between three and four times bigger by 2020.
It says in just ten years, China’s already massive construction market will be worth almost US$2.4 trillion, nearly 20 per cent of global construction output.
The ten year forecast indicates that emerging markets will rapidly overtake the construction output of their developed neighbours.
"The top ten highest growth markets in 2020 will be entirely composed of emerging markets, with Poland the only European country to feature on the list," it said.
Speaking at the launch of the report “Global Construction 2020” in London, Mike Betts of Global Construction Perspectives said that China’s construction industry looks unstoppable.
“The construction market in China is already enormous at almost double the size of its nearest rival Japan. The United States has for some time held the top spot but despite its strong predicted growth over the next decade, China will become the world’s largest construction market by 2018,” he said.
Adrian Cooper of leading business forecasters Oxford Economics said: “We have identified the key drivers and used data including population projections, long term GDP estimates and public sector budgets to feed into our modelling to help us understand how the global construction industry is changing at a rapid rate.
“All of the data points to both short and long term growth in emerging markets. We predict that in just ten years time construction in these markets will more than double in size, growing by an estimated 110% and representing 17.2 percent of GDP in 2020.”
The report highlights that today’s global construction market is worth an estimated $7.5 trillion, representing 13.4 percent of global GDP. But by 2020, construction will be a $12.7 trillion global market, an overall growth of 70 per cent in the next decade. Construction in 2020 will account for 14.6 per cent of global GDP.
The largest construction market globally is residential accounting for 40 per cent of the total global construction market by 2020 when it will be worth $5.1 trillion, said the report.
The forecast is already coming true for Nigeria with the federal and state governments policy of developing the nation's infrastructure through Public Private Partnership (PPP) initiatives that have resulted in the concessioning of airports, roads, bridges and public buildings.
FG: Oil Companies Must Build Refineries
•Sets fresh condition for licence renewal, •Deregulation negotiations to resume
By Chika Amanze-Nwachuku in Lagos and Onyebuchi Ezigbo in Abuja, 11.13.2009
Investment in the downstream sector, particularly in refinery projects, is now the condition for issuance and renewal of concessions and oil licences to International Oil Companies (IOCs) in Nigeria.
Director of the Directorate of Petroleum Resources (DPR), Mr. Billy Agha, who disclosed this at a quarterly media briefing in Lagos yesterday, said Federal Government has directed that companies that fail to meet the fresh condition will not be issued with oil licences and will also not have their concession renewed.
Licences issued in 1968 expired after the 40-year lease on the oil blocks last year, but the government renewed the licences for one more year. They will soon be up for another renewal.
“Before any company will henceforth get its concession renewed, it has to invest in downstream projects and we want this to be in refinery project,” he said.
Agha who lamented the poor state of the four refineries in Nigeria stated that at the moment all the refineries are “dead”.
He put the combined average performance of the refineries during the period under review at 6.66 per cent, while the average crude oil received was 3,403,432bbls.
He also disclosed that the total crude oil production for the third quarter of 2009 was 214.6 million barrels, at an average daily rate of 2.333 million barrels per day.
Giving further breakdown, he said the July average was 2,260,224 bpd. In August, it was 2,280,197 bpd, while that of September was 2,462,516bpd.
He also revealed that the nation’s crude oil reserve has hit 38.6 mostly from the deep offshore.
“As at January 1, 2009, the nation’s oil reserves was at 33.41 billion barrels of oil, condensate reserves was 5.20 billion barrels (38.61mmb). There is an observed net increase of oil reserves of 480 million barrels against January 2008 Reserves, representing about 1.46 per cent increase. The increase is noticeable mostly in Production Sharing Contracts (PSC) Assets in the Deep Offshore areas,” he said.
Agha said owing to the inclusion of condensate, the country currently produces over 2.2 million as against the 1.67 million barrels per day imposed by the Organisation of Petroleum Exporting Countries (OPEC).
The DPR boss also disclosed that production deferment for the third quarter of 2009 was as follows: June, 634,371bpd, July, 827,517bpd, and August 2009: 893,523 Barrels per day. The deferments, he explained, were as a result of the Niger Delta crisis and other operational problems.
In terms of revenue generation, he said the agency remitted about N312 billion to the Federation Account during the said period.
Meanwhile, President Umaru Musa Yar’Adua has directed the government team to step up consultations with Labour and other stakeholders to ensure that the issue of deregulation of the downstream sector of the oil industry is amicably resolved.
The Group Managing Director of the Nigerian Natio-nal Petroleum Corporation, Dr. Mohammed Sanusi Barkindo, who spoke to journalists yesterday, said the corporation was pushing for the granting of financial independence to the four petroleum refineries as a means of guaranteeing efficiency and viability of the companies.
Barkindo said consultations on deregulation were continuing as directed by Yar’Adua, just as steady progress was being made on several issues.
Speaking on the protracted talks between government and the Nigeria Labour Congress (NLC) and its allies, Barkindo said the president had given his word that negotiations must continue until the matter was amicably resolved and that government would not take any unilateral action to impose deregulation.
“Consultations have been going as directed by Mr. President because he does not believe in unilateral action,” he said.
He described the negotiations as very important and critical to the country’s national development aspiration.
“I also want to add my own voice to say that Nigerians should take note of the consultations that has been going on between government team and all the stakeholders because good governance is about consultation in decision making devoid of unilateral actions. We believe in collective decision and I believe that the decision that will be arrived at will be in the larger interest of Nigerians,” he said.
Barkindo said it is particularly noteworthy the constructive and mature manner in which the labour team has handled its submissions.
“I want to use this opportunity to state that the ongoing consultation between labour and government on deregulation is not deadlocked. The NLC has accommodated our key requests and we have also taken into account their very valid concerns.
“We welcome their setting-up of a 10-man committee under the leadership of the Deputy President of the NLC Comrade Peter Adeyemi to continue with this dialogue and consultation during and after the deregulation,” Barkindo stated.
May His 72 Virgins Not Be Female.
(John Allen Muhammad has been Rehabilitated)
Sixty Asian firms ready to invest in Nigeria
From Emeka Anuforo, Abuja
THE Chairman of the First Nigeria-China Business and Investment Forum (FNCBIF), Mr. Idris Waziri yesterday, said his group had so far succeeded in getting the commitment of about 60 Chinese companies to consider investment opportunities in Nigeria as a result of anticipated peace in the Niger Delta region.
The former commerce minister, stressed that the fact that militant youths had surrendered their arms and ammunition and embraced amnesty had sent signals to the world that peace was returning to the embattled oil-rich region.
He noted that 60 Asian firms might invest in the energy, banking, solid minerals, telecommunications, transportation, engineering and manufacturing sectors and would arrive Nigeria on November 8 for the first NCBIF, which has been scheduled to open in Abuja on Monday, November 9.
Addressing the media yesterday in Abuja, after the committee meeting, Waziri said business experts from China had been considered for the partnership because of the emerging commercial development in the Asian country.
He said: "No country would have agreed to come to Nigeria if there were no prospects for peace in the Niger Delta. We appreciate the effort of President Umaru Musa Yar'Adua to bring lasting peace to the region through the amnesty programme. With the amnesty, investors are willing to come here because they now know that Nigeria is safe for investment."
Speaking on the choice of China for the bilateral investment relations, Waziri said: "China is the heart of Asia because it is the largest economy in Asia. They have passed the stage, which Nigeria is presently; they can better appreciate our problem that is why we want to learn from them. We want to know how they did it in their own country", he added.
The NCBIF was inaugurated on May 18, 2009 to organize a trade and investment meeting between Nigeria and China so that the two countries could have unimpeded business relations.
He added: "We appreciate the idea of Mr. President. We want to shift emphasis from mere buying and selling to investment and manufacturing. Until we are able to industrialise this nation, the vision 20:20:20 cannot be achieved and to industrialise this nation, we need foreign economy-investment. Good enough, the President has provided the required environment by ensuring that there is peace in the Niger Delta".
Govt to build six ports in N'Delta
* M'Belt Forum demands total resource control
From Madu Onuorah and Mohammed Abubakar, Abuja
SIX additional ports are to be built by the Federal Government along the lower River Niger in the Niger Delta region.
They are to be built at the completion of the dredging of the River Niger, according to the 42nd session of the Federal Executive Council (FEC), which yesterday approved contracts for the construction of the Inland Port and ancillary facilities at Baro, Niger State, at a total cost of N3.56 billion.
In the meantime, the Middle Belt Forum (MBF) has demanded the implementation of true federalism in the country with every state taking total control of its resources and paying 75 per cent tax to the Federal Government.
To this end, the forum said the proposed 10 per cent stake in the petroleum industry for the oil producing states would become unnecessary once this fundamental issue was addressed through constitutional amendment.
The FEC also approved the expansion and upward review of the contract for the completion of the Galma Multipurpose Dam in Kaduna State from an initial figure of N4,933,166,034.84 to a total of N11,773,832,429.57.
A contract for the maintenance of the Total Radar Coverage of Nigeria project systems of the Nigerian Airspace Management Agency at a total of 20.6 million Euro was also okayed. The contract is aimed at ensuring an equipment maintenance system for the nation's aviation sector, is expected to last for a period of five years.
Speaking to journalists at the end of the Council meeting, the Minister of Information and Communications, Prof. Dora Akunyili, said: "Following a memo presented by the Minister of Transport, Council approved the implementation of Addendum No. 2A to the main contract of Ajaokuta-Warri Rail line for the completion of the remaining approximately 22km, including sidings from Ovu village to Delta Steel Jetty, Aladja: Construction of six stations and rehabilitation of the completed line up to 254km. The contracts awarded to two contractors in the sum of N9,243 billion plus £109,284 million and N594,515 million plus £7 million, payable at the prevailing exchange rate at the time of payment and both with a completion period of 40 months.
"In line with the seven-point agenda of the present administration and its policy of developing an efficient water transportation system in the country for the movement of passengers and goods between the coast and the hinterland, Council considered and approved the award of contract for the construction of the inland River Port and ancillary facilities at Baro, Niger State in the sum of N3.56 million with a 20 months as completion period.
"Recall that the contract award for the dredging of the lower River Niger spanning over 520 kilometres was purposely made for water transportation. In this vein, government has awarded the building of a new port terminal and ancillary facilities at Baro, Niger State, which will help in easing pressure on our existing ports and will also reduce pressure on the roads because large cargoes will be transported through water via this port.
"In President Yar'Adua's master-plan for water transport sector, plans are to build additional six ports along the lower River Niger at the completion of the dredging of the River Niger. All these efforts are in keeping with President Yar'Adua's administration's seven-point agenda. Henceforth, with such interventions in railway rehabilitation, our roads will be saved from repeated dilapidation and damage due to over use and overweight cargoes."
Akunyili explained that the revision of the contract and its cost followed the new focus of the Ministry of Agriculture and Water Resources to move away from single-purpose dam as it is "uneconomical."
She added that a series of studies conducted by many consultants on the Galma River system between 1979 and 2005 reveals that it has potentials for "irrigated agriculture, hydro-power generation and potable water supply."
In a statement yesterday, the National Chairman of the Middle Belt Forum, Wilberforce Juta and its National Publicity Secretary George Ohemu, noted that implementing the suggestion would ensure that every state optimally develops her resources, thereby diversifying the nation's economy, promote healthy competition, dynamism, mutual respect and enhanced productivity which will result in prosperity for all.
According to the statement: "We need to develop the coal in Enugu, Kogi, Benue and Nasarawa states; bitumen in Ondo and other coastal states; agriculture and tourism potentials of Taraba, Adamawa, Bauchi, Gombe, Kaduna, Plateau, Benue, Kogi, Kwara, Cross River, Sokoto, Kebbi and other states.
"We must promote commerce and industry in the eastern states, Rivers, Kano, Lagos and others. This will unleash the capacity of the states to develop their resources and environment.
"On the proposed deregulation of the petroleum sector, the Middle Belt Forum calls on the Federal Government to cushion the effect on the populace by creating a special account for the savings from deregulation. Such savings should be used for designated infrastructure and welfare projects. Strict prudence and accountability must be enforced in utilising the proceeds, with Labour leaders, representatives of the civil society groups and other stakeholders involved in monitoring the use of the funds.
"The Forum lauded the Federal Government on its 'largely successful amnesty programme' in the Niger Delta region. However, we believe that government must go beyond palliative measures as we need to address the fundamental issues that precipitated the crises. The Middle Belt Forum believes that the Federal Republic of Nigeria must practice true federalism, and every federating unit must be allowed to control its resources while paying any agreed percentage as tax to the federal government. Resources control by the federating units is a fundamental requisite for true federalism."
The Forum challenged the Federal Government to pursue with more vigour its seven-point agenda, removing every obstacle to ensure the achievements of its set targets and date lines especially in the power sector.
It added: "It is not enough to announce the award of multi-billion naira contracts on public infrastructure especially in the transport and power sectors. We need to see increased construction and developmental activities, which will create jobs for the youths. We also need to have more concrete results to justify the large sums of money being expended.
"We call on both the federal and state governments to declare a state of emergency on graduate unemployment. All unemployed graduates should be registered with the Ministry of Labour and Productivity. Concerted efforts should then be made in collaboration with the private sector to create jobs for these young people."
Chinese manufacturing data boosts oil prices
WORLD oil prices rallied yesterday, partly boosted by positive manufacturing data from China, which is the world's second biggest energy consuming nation after the United States.
New York's main contract, light sweet crude for December delivery gained $1.03 to $78.03 a barrel.
Brent North Sea crude for December delivery was $1.22 higher at $76.42 per barrel.
"Robust economic data from China is lending support today," said Commerzbank analyst Carsten Fritsch.
The HSBC China Manufacturing PMI, or purchasing managers index, was revealed yesterday to have risen to an 18-month high of 55.4 in October from 55.0 in September.
A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.
A separate official Chinese PMI, compiled by the National Bureau of Statistics, showed manufacturing activity rose to 55.2 in October -- the highest since May 2008 -- from 54.3 in September.
Oil prices also found fresh support by a drop in the value of the US dollar.
The US unit fell against the euro yesterday amid fresh worries about the US financial sector following the bankruptcy of US bank CIT Group over the weekend, traders said.
The weaker greenback makes dollar-priced oil cheaper for buyers using stronger currencies and therefore tends to stimulate oil demand and prices.
In late morning London deals, the European single currency rose to $1.4772 from $1.4715 late on Friday.
Traders meanwhile assessed the global economic outlook in the wake of the CIT bankruptcy.
While data released last Thursday showed the United States has emerged from a prolonged recession, consumer spending, which accounts for two-thirds of the nation's economic activity, fell in September.
"I think the reality is that the economic signals out there have been mixed," said Victor Shum, a Singapore-based analyst with energy consultancy Purvin and Gertz.
"Last week there was positive US (gross domestic product) but consumer spending was quite negative."
Shum added that "even though there are signs of economic recovery, the recovery appears to be on a shaky ground and also somewhat uncertain."
The US said Friday consumer spending in the world's biggest economy and energy user fell for the first time in five months in September.
A day earlier, the Commerce Department said the US economy grew at a seasonally adjusted 3.5 per cent in the September quarter from the previous three months.
It was the biggest growth in two years as the country emerged from a brutal recession that started in December 2007.
Shell Vows to Fight off Chinese over Nigeria’s Oil
•Amnesty: Production on the rise in Bayelsa,
By Ejiofor Alike in Lagos and Segun James in Yenegoa with agency report, 10.30.2009
Royal Dutch Shell Plc has said that it will fight any possible efforts by the Federal Government to hand over the control of its Nigerian oil fields to Chinese oil companies.
This is coming as the Europe’s largest oil company by market value said its restructuring programme was yielding results with operating costs reduced by $1 billion in the first nine months of 2009 and with around 5000 jobs cut.
The oil major also said that its crude oil output in Bayelsa State had increased from 12,000 barrels per day at the height of militancy in the Niger Delta to 100,000 barrels per day in the last few weeks.
According to a Reuters report, when asked about recent Chinese approaches to the Nigerian government, newly-appointed Chief Financial Officer of Shell, Mr. Simon Henry, told analysts yesterday on a conference call that the oil major would resist the Chinese move.
“One thing you probably will have seen, and can be sure of, is that both ourselves and the industry will defend our interests,” Henry told the analysts.
China has indicated its desire to move in on oil blocks currently licensed to Shell, Chevron and ExxonMobil, offering about $30 billion for 49 per cent in 23 oil blocks – 18 onshore and five offshore.
Henry noted the speculation came against a background of Nigeria proposing an oil reform bill.
The proposed Petroleum Industry Bill (PIB) “could allow the government to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore,” he said.
THISDAY had reported that the China National Offshore Oil Company (CNOOC) had made a proposal to buy six billion barrels of Nigeria's crude oil reserves and the Federal Government said it could sell stakes in its joint ventures with the International Oil Companies (IOCs) to help the Chinese do so.
Minister of State for Petroleum, Mr. Odein Ajumogobia, who had confirmed this development, however pointed out that China would not be given all the reserves it was seeking.
He, however, stated that the Nigerian National Petroleum Corporation (NNPC) could sell stakes in joint ventures with existing oil partners if the Chinese offered the right price.
He said: “It's true that the Chinese have made a proposal which we are considering. They are asking for 6 billion barrels of oil from our reserves, but I can tell you that we are not going to give them all of that.”
Western oil firms including Royal Dutch Shell, Chevron and ExxonMobil, operate in Nigeria through joint ventures with NNPC.
Asked if the NNPC could sell its stakes to China, Ajumogobia had said: “It's an option we are also looking at. Why not? If the offer is very good, and very attractive. Why not? NNPC has the right to do whatever it likes with its own share.”
Ajumogobia had earlier said that the Federal Government was in talks with the Chinese company.
“We are talking to them about their quest to buy proven reserves. This is not new, this predates this administration,” he said, adding: “We are not offering leases that are up for renewal in the middle of negotiations to renew. That is not happening.”
Ajumogobia said the Chinese had identified a number of blocks in which they would be interested, including licences operated by Royal Dutch Shell, Chevron and ExxonMobil which originally expired in November and December 2008.
Chevron and Exxon won a year’s extension, meaning their licences are due to expire this year, while Shell successfully sought a court injunction allowing it to continue to operate while it challenged the expiry, an industry executive said.
Analysts had expressed the feelings that if the Chinese bid is successful, it could place the company in competition with major western groups including Total, Shell, Chevron and ExxonMobil, which operate the 23 blocks under discussion.
The 23 oil mining leases identified as targets by CNOOC included Shell's Bonga field, ExxonMobil-operated Erha and Chevron's Agbami.
The Bonga licence will expire by 2023, while Agbami expires in 2024.
“We have not invited anyone to discuss the possibility of leasing these proven reserves. The Chinese made an offer and said they had identified certain blocks including some already being exploited by some of our partners,” Ajumogobia added.
The Financial Times also reported that CNOOC was bidding for six billion barrels of Nigeria’s oil in a deal worth about $30 billion.
Meanwhile, Shell has also said its third quarter net profits fell 73 per cent, after being hit by falling oil and gas prices and refining margins, while Chief Executive Officer, Mr. Peter Voser, has warned of a slow recovery.
“We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery,” Voser said in a statement.
Voser said his restructuring programme was yielding results with operating costs lowered by $1 billion in the first nine months of 2009 and around 5000 jobs cut.
In a related development, Shell Petroleum Development Company (SPDC) has announced an increase in the Bayelsa State production figure since the end of militancy in the Niger Delta.
Managing Director of SPDC, Mr. Mutiu Sunmonu revealed this to the State Executive Council (SEC) when he paid a working visit to the state.
According to him, oil production in the state had increased from a paltry 12,000 barrels per day at the height of militancy in the region to 100,000 barrels per day in the last few weeks.
Sunmonu also predicted that within the next few months, the figure was expected to increase to about 150,000 barrels per day.
He stressed that all other things being equal, before the end of 2010, the state might hit its former height of 250,000 barrels per day.
Speaking on the visit of the SPDC management, the state Commissioner for Information, Orientation and Strategy, Chief Asara A. Asara, said though they were happy about the development, the governor, Timi Sylva, is intensifying efforts on some aspects of the PIB in order to ensure it is more beneficial to the people.
The state’s production figure had nosedived at the height of the militant activities, moving the state from being the second largest oil-producing state to the sixth position.
Oil prices rise on strong U.S. growth data
OIL prices rose to near $79 a barrel yesterday, after fresh data showed that the U.S. economy grew faster than expected in the third quarter, raising hopes of a sustained recovery in demand.
By mid-afternoon in Europe, benchmark crude for December delivery had jumped $1.51 to $78.97 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.09 to settle at $77.46 on Wednesday.
The U.S. Commerce Department said the world's largest economy expanded by 3.5 per cent in the third quarter of the year, more than analysts were forecasting, and confirming the U.S. is out of recession.
The news boosted equity and commodity markets on hopes that crude demand would recover more quickly than previously anticipated.
Still, separate data was less encouraging and reminded investors that a rebound in growth would be fragile: the Labor Department reported that the number of people claiming jobless benefits for the first time dropped less than expected last week.
On Wednesday, the Energy Information Administration said Wednesday that gasoline stocks rose 1.7 million barrels last week while analysts had expected a fall of 1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Crude supplies rose 900,000 barrels last week, the EIA said.
"The bearish EIA report featured some unusually negative gasoline figures," Galena, Ill.-based consultancy Ritterbusch and Associates said in a report. "We feel that further price declines will be forthcoming."
Since last week, crude has retreated from $82 a barrel, the high for 2009, as the U.S. dollar gained back some of its losses from recent months. Because commodities are priced in dollars, they become more expensive - and less attractive - to international investors when the U.S. currency rises.
The euro rose to $1.4799 yesterday from $1.4714 while the dollar gained to 91.24 yen from 90.64.
"It appears that market participants have come out of self-denial and realized that the build in crude prices is not founded on solid fundamentals," said JBC Energy in Vienna, forecasting that the market was in a "downward correction phase and should continue moving toward the $70 per barrel mark."
In other Nymex trading, heating oil rose 4.45 cents to $2.0414 a gallon. Gasoline for November delivery added 1.90 cents to $2.0054 a gallon, while natural gas for December delivery fell 1.5 cents to settle at $5.051 per 1,000 cubic feet.
In London, Brent crude for December delivery rose 1.44 cents to $77.30 on the ICE Futures exchange.
Oil prices slip on profit-taking, ceasefire in Nigeria
OIL prices fell yesterday, on profit taking and as a ceasefire took hold in Nigeria whose crude production has been ravaged by militant attacks in recent years, analysts said.
Brent North Sea crude for December lost 17 cents to $78.75 in late morning London trade.
New York's main contract, light sweet crude for delivery in December, shed 27 cents to $80.23 a barrel.
The New York contracts had Wednesday hit $82, last seen October 14, 2008, on the back of a slumping US currency.
However, the oil market lost ground on Friday amid modest profit taking and as the US dollar strengthened.
"The market had run out of steam after an impressive rally at the start of last week," said VTB Capital analyst Andrey Kryuchenkov.
Meanwhile, Nigeria's main armed group in the oil-rich Niger Delta declared on Sunday an "indefinite ceasefire" to encourage dialogue with the government but the Abuja authorities rejected the fighters' mediation team.
The Movement for the Emancipation of the Niger Delta (MEND) said it made its decision after the government "expressed its readiness to engage in serious and meaningful dialogue with every group or individual towards achieving a lasting peace in the Niger Delta."
MEND's attacks on Nigeria's oil industry have helped play havoc with oil prices on the world market and slashed the nation's output by a third since 2006. Nigeria is the world's eighth-largest oil producer.
A key demand from MEND is that local communities must benefit from the region's oil wealth.
Analysts at JBC Energy consultancy in Vienna said that the Nigerian ceasefire was "positive news" which would ease supply worries.
"Last week's announcement by the Nigerian government that it is willing to give 10 per cent of the country's oil wealth to the residents of the Niger Delta appears to be paying dividends, with Nigeria's main militant group MEND announcing ... it is to reinstate a previous ceasefire to engage in talks with the government," JBC analysts said.
"However, the security situation in Iraq looks increasingly uncertain following two bombings at the weekend," they noted.
"This again put into question just how much the country will be able to increase its oil output in the next few years."
Iraqi security forces were on high alert yesterday, a day after twin suicide vehicle bombs blamed on Al-Qaeda killed around 100 people and blasted government offices in Baghdad.
Before the weekend, oil market sentiment was dampened by surprising data showing Britain still mired in a deep recession in the third quarter, confounding forecasts for a return to growth after five negative quarters.
Britain had been expected to follow France and Germany out of recession after they posted growth in the second quarter but the country now looks to be in deep trouble, having to face a soaring public deficit at the same time.
Later this week, on Thursday, investors will focus on crucial third-quarter gross domestic product (GDP) data for the United States, the world's biggest consuming energy nation.
Oil prices may hit $100 per barrel on weak dollar, says Deutsche Bank
Oil prices may surge to $100 a barrel sometime in the next two quarters as the U.S. dollar weakens against the euro, Deutsche Bank energy economist Adam Sieminski said Friday.
"We think the dollar could weaken further to $1.60 against the euro and it implies pushing oil prices to that threatening triple-digit level," Sieminski told Reuters.
A weaker dollar could mean "oil prices have even further to run," but a rise to $100 a barrel may hurt an economic recovery, Deutsche Bank said in a research note.
"We believe that $80 oil is not high enough to derail the global recovery, but our economics team would start looking for weaker overall consumption at $100 a barrel prices," the note said.
Oil prices rose to a one-year high of $82 earlier this week, after rallying 17 per cent since Oct. 10. That rise coincided with a rise in global stock indices and a weakener dollar, which plunged to a 14-month low above $1.50 per euro this week.
Oil, priced in dollars, has been moving in an inverse price relation against the dollar. Global oil and product inventories remain well above average levels.
"The 'traditional fundamentals' are improving, but only slowly," he wrote.
OPEC members could be put in a "difficult position" when they meet in December to consider whether to boost oil production and cool prices.
"OPEC may want to calm the market with more crude, but it's not clear that refiners have an appetite to take it," Sieminski wrote.
Deutsche Bank has kept its 2010 oil price outlook at an average $65 a barrel, below today's price near $81. Sieminski said the lower price outlook was in part due to still high global inventories.
Global oil demand plunged last year amid a financial crisis and after oil prices spiked to a record above $147 in July, before falling to nearly a five-year low near $32 in December.
OPEC May Increase Output in December
By Chika Amanze-Nwachuku with agency report, 10.23.2009
Following the rise in crude prices at the international market yesterday, member states of the Organisation of Petroleum Exporting Countries (OPEC) may increase their output targets when the group meets in Luanda, Angola on December 22.
Speaking to Reuters yesterday, OPEC’s Secretary-General, Mr. Abdalla el-Badri, said if oil prices continue to rise; if the global economy continues to recover and there is fall in global inventories, the organisation would not hesitate to increase production targets at its December meeting.
Crude oil slipped towards $80 yesterday as a stronger dollar encouraged investors to lock into profits from a 12-month high on Wednesday.
US crude oil futures fell 63 cents to $80.74 a barrel by 1205 GMT, having dipped as low as $79.90. London Brent crude fell 49 cents to $79.20. On Wednesday, US crude surged to $82, the highest price since October last year, as weekly US government oil data showed a large drop in gasoline inventories over the last week and fuel demand rising about 4 per cent year-on-year.
El-Badri said OPEC was comfortable with prices at current levels, particularly compared to the price drop to near $30 late last year.
“If these prices will continue; if we see the stocks go back to normal levels, the five-year average; if we see there is real economic growth, I am sure our member countries will take a decision to increase the production. This is up to the ministers to decide.
“The market is improving, but we would like to see evidence. If we see a shortage, OPEC will not hesitate to increase the production,” eI-Badri said.
According to him, “When I go back to December and I look at the price now, I think we are in a very comfortable zone at this time.”
The current prices, he said, would ensure the revival of all 35 upstream projects, which OPEC had put on hold due to the drop in oil prices, to boost output capacity.
El-Badri, however, declined to reveal what the projects are, but said collectively, they would account for 1.2 million barrels per day of production capacity.
Oil prices touched an all-time high of $147.27 a barrel on July 11, 2008, but fell to $32.40 in December same year as the world grappled with recessionary pressures, which eroded global oil demand.
Prompted by the declining oil prices, OPEC said last year it was delaying some 35 oil projects till after 2013.
The secretary-general had said at a Chatham House energy conference that the group’s revenue had been adversely affected by the plunge in the oil price, a development which he said prompted member countries to suspend 35 of the 150 projects due to come on line in the next few years to expand supply.
He said the falling prices of crude oil not only affected investments in both the upstream and downstream, but would delay future investments. He also raised fears that if the present situation did not change, future investments would be cancelled, a development which would automatically affect oil supply to the market.
“If the present situation does not change and we do not return to reasonable prices for oil products, the likely effects will be far-reaching. Very low prices will affect investments in both the upstream and downstream.
“This will have two main consequences. First, it will delay future investments in the sector, and second, it may also lead to the cancellation of further future investments. Either way, this will automatically affect oil supply to the market. In addition, it will also have an effect on gas supply,” he said.
However, with the current price rally of $ 80 a barrel, OPEC said it is in a comfortable zone.
Crude production averaged 28.83 million barrels per day p/d in September, up 40,000 b/d from August's 28.79 million b/d, a Platts survey of OPEC and oil industry sources and analysts on October 8 revealed.
The survey attributed the production increase to higher volumes from Angola and Nigeria, where production, which had suffered setback owing to years of crisis in the Niger Delta region, has bounced back.
“Production has risen again, but mainly because of higher volumes from Angola and Nigeria. The latter aided by a decline in militant attacks on oil installations in the Niger Delta, the country's main producing area,” Platts Global Director of Oil, John Kingston, said.
The survey noted that increases from Angola and Nigeria totalling 150,000 b/d were offset by decreases from Ecuador, Iran , Iraq , Saudi Arabia, the United Arab Emirates (UAE) and Venezuela totalling 110,000 b/d.
At its September 9 meeting, OPEC had agreed to maintain output quotas at 24.845 million barrels a day on hopes that a recovery in the world economy would keep oil prices high.
The group had resolved that there was no need to change production in view of the price rally and instead called for stricter compliance with existing curbs.
To help boost prices, which had dropped below $35 a barrel, OPEC, supplier of about 40 per cent of global oil, agreed last year that members with quotas should cut output by a combined 4.2 million barrels a day to 24.845 million barrels per day.
The September meeting was the third time this year the group had met without changing output.
Excluding Iraq, which does not participate in OPEC output agreements, production from the OPEC-11, the members bound by quotas, the survey disclosed, rose by 90,000 b/d to 26.33 million b/d in September, up from 26.24 million b/d in August.
The latest estimates leave the OPEC-11 overproducing their 24.845 million b/d output target by about 1.49 million b/d.
Compliance with the 4.2 million b/d of cuts agreed late last year has been declining since April alongside a broad firming of oil prices. Having peaked at close to 82 per cent in March, compliance fell to 64.6 per cent in September, Platts said.
However el-Badri, who spoke in Abuja last week, put the current level of compliance at 65 per cent.
Somali pirates seize Chinese bulk carrier
October 21, 2009
NAIROBI: Somali pirates operating 700 nautical miles from shore captured a Chinese bulk carrier on Monday in a raid highlighting their determination to outfox foreign naval patrols in the Indian Ocean.
The vessel, carrying 25 Chinese crew, was hijacked 550 nautical miles north-east of the Seychelles, said the European Union's counter-piracy force, which is tracking the ship from the air.
''The [EU] aircraft spotted at least four pirates on the deck and the vessel is towing two skiffs,'' said John Harbour, a spokesman for the EU force. ''It was last reported heading towards the Somali coast.''
Pirates are holding at least six vessels in Somali waters. Attacks are expected to rise as the seas become calmer after the summer monsoon season. After a drop in winds north of the Seychelles pirates have concentrated activity there in recent weeks, seizing ships from Spain and Singapore.
The hijackers are able to operate so far out to sea using previously captured ''mother ships'' from which they launch high-powered skiffs. The huge area the pirates patrol - one of the ships being held was attacked near Oman, north of Somalia - makes it difficult for foreign navies deployed to the region to stop them.
Somali gangs operating in the Gulf of Aden and the Indian Ocean hijacked 31 ships in the first six months of the year, netting millions of dollars in ransoms. The most recent payday came on October 5, when a Turkish vessel carrying 23 people was released after three months.
The Spanish newspaper El Pais reported on Monday that several Spanish trawlers near the Seychelles had employed former British soldiers as armed guards. The Spanish Government does not allow its military to protect private vessels.
Guardian News & Media
Oil prices extend rally above $80 as earnings beat forecasts
OIL prices briefly rose above $80 a barrel yesterday, as better-than-expected U.S. corporate earnings boosted investor confidence and the dollar fell against other major currencies.
By mid-afternoon in Europe, benchmark crude for November delivery was down 14 cents at $79.47 in electronic trading on the New York Mercantile Exchange. Earlier in the session, it rose as high as $80.05 a barrel before falling back. The contract rose $1.08 to settle at $79.61 yesterday.
Crude did a chin-up over $80 a barrel for the first time this year after Apple Inc. and Texas Instruments Inc. reported third quarter earnings on Monday that beat analyst forecasts. Caterpillar Inc., Coca-Cola Co. and DuPont are scheduled to report later yesterday.
Crude demand has remained sluggish this year as the global economy recovers from recession. With the U.S. Federal Reserve keeping interest rates at near zero per cent, investors have flocked to stocks and commodities to make money.
"This rally isn't based on fundamentals. It's about risk appetite," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore. "Money is looking for some kind of return."
Commodities like oil and gold are bought and sold in dollars, making them cheaper and more attractive to investors when the U.S. currency falls.
The euro rose to $1.4976 from $1.4944 late Monday in New York, while the British pound rose to $1.6447 from $1.6370.
JBC Energy in Vienna said the break above $80 was "in line with gains in equities and a dollar loss."
"However, we see little support for the rally, which is now eight days old, and think that at some point OPEC spare capacity of about six million barrels and massive on- and offshore stocks - to mention just a few of the bearish items - will trigger a correction phase," JBC said in a report.
Meanwhile, London-based energy consultancy, Centre for Global Energy Studies (CGES) warned Monday that the oil market was "vulnerable" to "misreading" the signals about the strength of a global economic recovery.
"The world appears to be coming out of recession but growth remains fragile and patchy," the influential CGES said in a monthly report.
"Governments have pumped unprecedented amounts of money into the global economy and will need to carefully manage the endgame of the stimulus.
"Oil prices are being driven by wider economic forces and remain vulnerable to the misreading of economic signals," it added.
A struggling US dollar has also given a lift to oil prices. A weaker dollar makes greenback-priced crude cheaper for buyers holding stronger currencies, which tends to stimulate demand.
Oil prices tumbled from historic highs of more than $147 in July 2008 to about $32 in December because of the global recession but have since risen on recovery hopes.
In other Nymex trading, heating oil was up 0.11 cent to $2.0533 a gallon. Gasoline for November delivery lost 0.57 cent to $1.9815 a gallon. Natural gas for November delivery jumped 15.4 cents to $4.989 per 1,000 cubic feet.
In London, Brent crude for December delivery fell four cents to $77.73 on the ICE Futures exchange.
Nigeria: Government to spend oil income on Niger Delta amid fears of siphoning
Tuesday 20 October 2009 / by Konye Obaji Ori
The Nigerian government has agreed to spend 10% of oil revenue directly in the communities of the Niger Delta, as part of a plan to stop militants from attacking oil installations in the delta. However the authorities are thorn on how to disseminate the funds so as to achieve the desired goal.
“The idea is for the benefits to flow directly to the delta people. Every community, whether blind or deaf or dumb, every citizen will say: ’I own a part of this business," Emmanuel Egbogah, Presidential adviser is quoted by the UK’s Financial Times, adding that the money would go directly to the various communities, bypassing powerful state governors. Concerned Nigerians, however, believe that local officials would systematically embezzle the money.
According to reports, more than $338m is expected to be put into the Niger Delta communities in the first year of the plans’ implementation. And although the plan has been has been greeted as a welcomed development by some observers, given the fact that rebel factions claim to be fighting for a fairer share of oil wealth for delta residents, some however say that the allocation of Nigeria’s oil money, though strictly governed by the constitution, is likely to face stiff opposition from the regions outside the delta, because it would mean reduced revenue for them.
The Niger delta militants in the name of grievance have resorted to killing and kidnapping, and funding their activities by virtue of oil theft. The Nigerian government conversely embarked on an amnesty program and has persuaded a number of leading militants to hand in their arms in exchange for education, rehabilitation and cash, raising hopes of an end to the unrest which has severely curtailed oil output in Nigeria. But it is widely believed that the rebels have not given up their entire arsenals – albeit the significant quantities of weapons dumped. In fact, the lack of independent monitors verifying what happens to those weapons is provoking concern.
According to local reports, there are no neutral observers collating the serial numbers of guns, for example, or formally witnessing weapons being put beyond use; in its place, that job is being done by officials in local government. The siphoning of some of these weapons is feared.
Oil companies
Meanwhile, Socio-Economic Rights and Accountability Project (SERAP), a civil society group has given the Nigerian government seven days ultimatum to commence collection of overdue revenue from six multinational oil companies including Shell Petroleum Development Company (SPDC) or face legal action. "Under international law, Nigeria is obligated to use its maximum available resources to achieve economic, social and cultural rights of its citizens. Implicit in this obligation is the responsibility of the government to exercise due diligence in the collection of all due revenue. The more resources a state has the greater its ability to provide services that guarantees economic, social and cultural rights, said Mr. Femi Falana, solicitor to SERAP.
Oil and natural gas in Nigeria is reported to have led to reprehensible corrupt practices in the country. Over the years, the country has seen its wealth withered with little to show in living conditions of the average Nigerian community. A Nigerian pre-independence political leader, Obafemi Awolowo, once said, since independence, our governments have been a matter of few holding the cow for the strongest and most cunning to milk, under those circumstances everybody runs over everybody to make good at the expense of others.
Some writers also have posited about the different potential causes of flagrant and graft that exists in the country: many blame greed and ostentatious lifestyle as a potential root cause of corruption. Nevertheless, a modern practical approach to leadership and political relationships has gradually taken a prominent role in the political process. The necessity for practical inter-dependence and cooperation is at the forefront of yearnings for good governance in the country.
OPEC Scribe Dismisses Claim of Alternative Fuel
By Ejiofor Alike, 10.20.2009
Secretary General, Organi-sation of Petroleum Exporting Countries (OPEC), His Excellency, Abdalla S. El-Badri, has dismissed fears about the imminent replacement of petroleum with bio-fuels and other alternatives, saying there is no alternative to oil as the main source of energy in the world.
Speaking at a one day media workshop in Abuja, tagged “Reporting OPEC,” facilitated by the Nigerian National Petroleum Corporation (NNPC), in conjunction with OPEC for energy journalists in Nigeria, El-Badri said the global debate about seeking alternative to oil would not yield result, because of the strategic importance of oil.
El-Badri, who has more than 45 years experience in international oil and gas business, argued that the talk about alternative or independent source of energy was not new.“But I want to tell you that oil will remain the dominant energy for the foreseeable future. I have been hearing this from the United States presidents in the last 30 years; at least, I am old enough to track this. There is nothing called independent energy.
There is no way America will not rely on oil from the Middle East or any other exported oil,’’ El-Badri explained while responding to a question on President Barack Obama’s policy of cutting down on America’s dependence on imported oil.In his presentation, Head of Public Relations and Information Department at the OPEC Secretariat in Vienna, Dr. Omar Farouk Ibrahim, called on energy correspondents to resist thetemptation of relying on slanted and biased information handouts from the western media in reporting OPEC.
Farouk, former lecturer in the Mass Communication Depart-ment, Bayero University, Kano, and a member of the Editorial Board, Daily Times of Nigeria, took participants through the inner workings and structure of the 49-year-old international organisation.
In his closing remarks, Group General Manager, Public Affairs Division of the NNPC, thanked the OPEC team for providing Nigerian journalists the opportunity to understand and report OPEC from the perspective of knowledge and exposure to details, and urged them to be objective.The 10-man OPEC team was in Nigeria for a three-day country visit, as part of its statutory responsibility to member countries.
Oil prices rise to $75, hit one-year high
(Actually Crude Oil Is Over $78. R.M.)
OIL prices jumped above $75 a barrel yesterday for the first time in a year on investor optimism crude demand will improve ahead of the Christmas shopping season.
A weak dollar, which makes commodities cheaper for international investors was also bolstering prices.
Benchmark crude for November delivery was up 95 cents to $75.10 by afternoon European electronic trading on the New York Mercantile Exchange. The price reached $75.15 earlier in the day, the highest since October 2008.
The contract gained 88 cents to settle at $74.15 on Tuesday.
Oil has traded between $65 and $75 since May as traders have considered mixed crude supply and demand data.
Some analysts expect an increase in diesel fuel demand from U.S. truckers supplying goods for the year-end holiday shopping season will trigger a sustained rise above $75. Others are more cautious, pointing to high inventory levels.
"We believe oil prices are poised to move higher," Goldman Sachs analysts, who expect prices to rise to $85 a barrel by the end of the year, wrote in a report. "All indicators still point to a normal seasonal pick-up in shipping to retailers this year."
Trader and analyst Stephen Schork struck the same note. "The trend still favors the bulls," he said, in his Schork Report.
But burgeoning oil supplies this year have weighed on oil prices. Investors will be looking to the latest U.S. inventory data later yesterday and today from the American Petroleum Institute and the Energy Information Administration.
"The problem is really that we have a lot of crude inventory," said Victor Shum, an analyst with consultancy Purvin & Gertz in Singapore. "This supply overhang makes the price vulnerable to any bad economic news, which we still get from time to time."
"It's more likely the price will hang around $70."
In other Nymex trading, heating oil was up by more than a penny at $1.94 a gallon and gasoline gained more than two cents to fetch $1.85 a gallon. Natural gas for November delivery slipped nearly nine cents to $4.50 per 1,000 cubic feet.
In London, Brent crude rose 61 cents to $73.01 on the ICE Futures exchange.
Global Economic Rebound Pushes Oil above $75 a Barrel
By Chika Amanze-Nwachuku with agency report, 10.15.2009
Oil surged yesterday above $75 a barrel, the highest this year, boosted by a weak dollar and optimism that a global economic rebound would lead to higher energy demand. But the International Energy Agency (IEA), adviser of 28 industrialised economies, has expressed concern over the rapid price rally. The energy watchdog in its monthly report last week said it had increased its global oil demand growth estimate for 2010 to 1.42 million barrels per day (bpd), up 150,000 bpd from its previous projection. Also the Organisation of Petroleum Exporting Countries (OPEC), yesterday raised its forecasts for world demand, saying it expected an average of 28.39 million bpd next year, up 300,000 bpd from its previous forecast. US crude jumped 71 cents to $74.86 a barrel by 0851GMT, after surging to a 2009 high above $75.15, earlier in the session. Brent crude rose 63 cents to $73.03. Dollar weakness makes oil and bullion more affordable for non-dollar holders. Reuters reported that analysts who use past price moves to predict future direction said a further rally would depend on US crude closing above $75 a barrel, which has been a key resistance level. “The advance in WTI is in our view purely technical and dollar linked -- hence reversals can be sharp when and if the dollar stops to fall off the cliff,” Reuters quoted an analyst at Petromatrix, Olivier Jakob as saying. Commenting on the rapid price increase, a senior commodity strategist at ANZ Bank in Melbourne, Mark Pervan said: “There’s a lot of positive sentiment right now, but that's largely driven by the softer dollar,” adding “whether the rally is sustainable depends on further dollar weakness. If there is, we could head toward the $75 to $80 range, but $75 would be a key resistance level”. The report stated that earnings are due from a number of major US companies this week and that oil market is tracking corporate results closely for signs of a broad economic rebound. Cold weather in the US, the agency further noted, has supported prices. Meanwhile, the IEA boss, Nobou Tanaka, has expressed concern over the price increase, though he declined to give reasons for his organisation’s concern. "We have increased our predictions for demand... but data from the field is not that promising. We are watching carefully how the real economy is moving in Organisation for Economic Co-operation & Development countries as well as emerging countries," he said. Tanaka also noted that the economic crisis was an opportunity to reach an agreement at the Copenhagen summit on climate change in December. He added he was still unsure about the outcome of the summit. "Usually, the real outcome in negotiations comes out at the last minute, so we don't know. We feel this economic crisis provides a window of opportunity to move towards a successful conclusion in Copenhagen," he said at a conference in Paris. Oil hit an all time high above $147 in July 2008, but hovered around $70 since last month. Gold also hit a record high yesterday, supported by the dollar, which is under pressure from expectations of low interest rates.
From Oily: This is the week ERHE goes over a $1.00. Watch for the API&G and DHP news
Chatter: News coming about Monster discovery in the JDZ
Q. So,,, does SEO get his $10 after all?
A. iwondertoo: Close to it
(Just Posting For Those Who Might Be Interested, Not Because I Am A Believer. RM)
Angola grants loan to Sao Tome and Principe for development programmes [ 2009-10-09 ]
Sao Tome, Sao Tome and Principe, 9 Oct – Angola plans to grant a US$5 million loan to Sao Tome and Principe for economic and social development programmes Sao tome’s prime minister said Thursday on his return from an official visit to Angola.
ON arriving in Sao Tome, Rafael Branco said that the loan was the second tranche of a commitment made by the Angolan authorities to the value of US$11.5 million.
The prime minister announced that by November “at the latest” a mixed commission meeting would be held between Sao Tome and Angola to discuss bilateral cooperation.
Branco, who said his visit to Luanda had been “quite positive” and had had “encouraging” results also mentioned a credit line that was due to be opened up soon by the Angolan government , to make it easier for the Angolan private sector to invest in Sao Tome and Principe.
This matter was part of the agenda under discussion between Branco and his Angolan counterpart, Paulo Kassoma. According to the Sao Tome authorities, investment by Angolan businesses in the archipelago would “create employment opportunities for local staff.”
The Sao Tome government, faced with the need to absorb around 200 young people that have recently concluded their higher education in Cuba and Brazil, is seeking to use the Angolan investments to integrate them into working life. (macauhub)
Sao Tome prime minister announces auction of oil blocks at beginning of 2010 [ 2009-10-07 ]
Luanda, Angola, 7 Oct – The prime minister of Sao Tome and Principe, Rafael Branco, said Tuesday in Luanda that the archipelago’s first oil blocks would be up for auction in the first quarter of 2010.
Following an audience with the Angolan president, José Eduardo dos Santos, the Sao Tome prime minister said that he hoped Sao Tome and Principe would benefit from the “great experience that Angola has gained” in the oil sector.
“Angola is a benchmark country, it has a world class company (Sonangol) and has staff that it has trained throughout the years,” said Branco adding that he hoped Angolan and Sao Tome oil companies could “also cooperate” to develop the sector on the archipelago.
The head of the Sao Tome government said he hoped "not to make the same mistakes others made," when they started oil production and he said he was hoping for Luanda's support i“ this respect as well.
In June the National Oil Agency (ANP) of São Tome and Principe had said the auction would be held in November, but the legislation for the sector on the archipelago has yet to be published. (macauhub)
The Titanic Battle for Nigeria’s Oil...
10.08.2009
Yesterday, THISDAY broke the story on how the delay by the National Assembly in passing the Petroleum Industry Bill (PIB) into law is playing into the hands of the oil majors. Ijeoma Nwogwugwu writes on the intrigues and the politics of the waiting game.
The Chinese National Offshore Oil Corporation’s(CNOOC) application for the acquisition of a 49-per-cent interest in 23 oil blocks, some of which are currently held by major operating companies, and the response of the Federal Government to same, has sent shock waves among the multinational oil companies which currently hold the leases.
The offer was actually made under the administration of President Olusegun Obasanjo, but nothing was done about it until a year ago when talks on the leases intensified.
It also brings to the fore the law suit instituted by Shell recently challenging the Federal Government’s decision to renew its expired acreages under new terms without taking into consideration the subsisting Petroleum Act of 1969 that provides for a renewal of the leases for another 40 years under the same terms.
The CNOOC is said to have made an offer of $30 billion for the 49 per cent stake in the oil blocks, translating to 6 billion barrels in oil reserves, which will be hived off from most likely the Nigerian National Petroleum Corporation (NNPC) stake in the joint ventures.
In its quest to acquire six billion barrels of oil, the CNOOC acting under the auspices of Sunrise Consortium applied for 49 per cent equity participation in the following blocks: OMLs 67, 68, 70, 11, 13, OMLs 71, 72, 74, 77, 79, 83, 85, 86, 88, 89, 90, 91, 95, 118, 127, 133, 139 and 140.
Concerns raised by NNPC
According to a memo by NNPC, the request is being given consideration as instructions have gone out from the Ministry of Petroleum Resources for the data on the blocks to be released to Sunrise by the Department of Petroleum Resources (DPR). In addition, a negotiating committee has been set up in NNPC to handle discussions with the company.
The committee is to consider the request and determine an optimum price for the reserves in the blocks against the backdrop of the offer made by CNOOC.
Eighteen of the 23 blocks requested are currently operated under the JV arrangement while the remaining five are operated under the Production Sharing Contracts (PSCs).
Of the JV blocks, 16 were awarded in 1968 (41 years ago) and expired late last year while two are due for renewal in 2019. Also, virtually all the expired blocks are located in the continental shelf except the two unexpired ones that are located onshore.
The PSCs were only recently converted to OMLs and are not due for renewal until 2020 at the earliest. Expectedly, all the PSC blocks are located in the deepwater and belong in the first set of deep offshore blocks awarded in the 1993 licensing round.
Of the 23 JV blocks, seven are operated by Chevron while three are operated by Mobil. The rest are held by the NNPC/Shell/Elf/Agip JV operated by Shell.
Though many of the blocks have expired since the end of 2008, they were renewed for one year while discussions on the terms of longer renewal leases are still ongoing.
The CNOOC initiative packaged by Sunrise, indicated the NNPC memo, is a welcome development as it might give some boost to exploration and production activities that have been flagging on account of the restive situation in the Niger Delta.
However, assigning highly productive blocks to a third party requires some strategic thinking. Granted that the blocks in question are due for renewal but where discussions are still ongoing, assignment to a third party could erode confidence and jeopardize the future of the JV arrangements.
According to the memo, other points to consider in respect of the overall request are as follows:
a) Need to settle the issue of the renewal of the expired blocks before venturing to assign interest to CNOOC;
b) Divestment of government interest in the blocks would translate to depleting the assets of the entities being proposed for Incorporated JV (IJV) arrangement as contained in the draft Petroleum Industry Bill (PIB);
c) With the execution of the back-in rights (Partial PSC) agreement with the International Oil Companies (IOCs) there may be no interest to assign to the third party unless the initial agreement is terminated;
d) Assigning interest in the highly productive JV blocks to CNOOC should merit an open sale that could attract other industry players.
e) If government intends to strengthen NNPC as proposed in the PIB, assigning such interest to the corporation should be the first consideration;
f) So far, Chinese companies have been awarded blocks in previous licensing rounds as follows: i. OPL 275 (onshore) - won by Chinese Petroleum Corporation (CPC) in the 2005 round; ii. OPLs 226 and 291 [formerly 216] (Continental shelf and Deepwater respectively) won by CPC in the 2006 round; iii. OPLs 721 and 732 (Chad Basin) won by Chinese National Petroleum Corporation (CNPC) in the 2006 round; iv. OPL 471 (Continental shelf) won by CNPC in the 2006 round; v. OPL 298 (formerly OML 65 onshore) won by CNPC in the 2006 round, but the block has been re-awarded to NPDC. In addition, SINOPEC, another Chinese National Oil Company, is in partnership with NPDC in the operation of OMLs 64 and 66. Apart from one well drilled in OML 64, not much has been done with the above awards. Therefore, one would wonder why the nation would be “assigning” proven reserves to the same entity without any recourse to shoring up the nation’s reserves base.
g) With Shell in court over the take-over of some of its blocks and discussions currently ongoing with the other asset operators, this latest development would compound issues and set government on a collision course with the operators.
Position of the IOCs
The IOCs have had issues with the new fiscal terms being proposed under the PIB and incorporation of the JVs. The request by the CNOOC will certainly add to their woes.
An official with one of the major oil companies operating in the country admitted that the problem is two-fold. He said that if the Federal Government fails to renew the leases, it means that November and December lifting of crude oil might already be jeopardized since the leases would have expired, and oil is sold several months ahead of time.
He said: “Our leases cannot be an incentive to delay the PIB. Our concerns have to do with securing our investment under reasonable terms that are a win-win for all parties.”
He stated that the government should be weary about giving a 49-per-cent stake to the CNOOC because the IOCs are entitled to a renewal of the lease for another 40 years, irrespective of the PIB.
What would happen with the passage of the PIB, he explained, is that the JVs would simply become incorporated and the current ownership structure would continue to subsist.
Explaining further, the official said the contract terms and the Act are very clear and stipulates that insofar as the IOCs have paid their royalties, petroleum profits taxes and other charges that may be imposed by the government under the contracts, the companies are entitled to a renewal for another 40 years.
“We have a letter from the Federal Government signed by the Minister of Petroleum Resources, acknowledging that we have met the contractual terms as defined under the contracts. This means we are entitled to another 40 years lease.
“But recently, the government told us that we should match or better the terms of the CNOOC, failing which our stake will be sold to the Chinese,” he disclosed.
Shell, he said, had gone to court to challenge the propriety of the government’s attempt to sell part of its stake in the JVs and PSCs.
If there is no resolution in sight, the other oil majors might have to take the some course of action to protect their rights, he stated.
But even he the official volunteered the information, little did he know that one of oil majors, Exxon-Mobil, had broken ranks by making an offer to the federal government of less than $100 million for all its oil acreages that are up for renewal.
Confirming the development, an official with NNPC who did not want to be identified, said Exxon-Mobil has made an offer that is significantly less than $100 million for its three blocks that have reserves in excess of 2 billion, “but had qualified it by attaching all sorts of conditions to the amount.”
The offer made by Exxon-Mobil, he explained, is rather unattractive and will certainly not excite officials in the petroleum ministry.
FG’s position
Providing clarification on the imbroglio arising from the request by the CNOOC, the Chief Economic Adviser to the president, Mr. Tanimu Yakubu, said he understands the concerns of the IOCs and they have informed the government that they have the right of first refusal on the said 23 blocks wanted by the Chinese.
He, however, explained that even as the IOCs are pushing to renew their leases, they have offered peanuts for the blocks in question.
“They are not even contemplating offering anything close to the figures being contemplated by the CNOOC,” he stated.
Added to this, he said the acreages cover oil field in which the oil majors had been flaring gas for decades, despite all the missed deadlines, entreaties and even penalties imposed by the government to get them to shut in the gas flares.
“The IOCs have been flaring associated gas produced with crude oil for decades, wasting a valuable resource and polluting the environment.
“We cannot continue under this kind of regime, so they have to offer us better terms than CNOOC,” he said.
But a source in the presidency who did not want to be named, said the government still had a long way to reaching an agreement with CNOOC.
In a text message sent yesterday, he wrote: “The Chinese offer is not as attractive as it appears. Its net present value as computed by NNPC is less than $30 billion.
“This is not commensurate with the asset class they are seeking from us. Not only are oil reserves a more valuable asset than US dollar reserves, the oil reserves will also meet the future energy security of the Chinese.
“The discussion with the Chinese has reportedly left out acreages that are committed, though the offer extended to those fields not yet available.
“It is hoped that the Chinese will improve their offer. Alternatively, the IOCs should better it.”
When contacted, the Minister of State for Petroleum Resources, Mr Odein Ajumogobia, said the CNOOC came with a generic proposal for 6 billion reserves for a certain consideration. According to him, their proposal coincided with the time the leases on 16 acreages were expiring and since the CNOOC had done its homework it added those leases to the list of 23 it wanted.
He said when the ministry granted the one-year extension to the IOCs on their expired leases last year, it had hoped that the PIB would have been passed before the one-year deadline, as this would have meant that the leases will be negotiated under different terms. “Unfortunately, this did not happen,” he said.
“So what we have told the IOCs is that if we must renew the leases for another 40 years, they must take into cognizance that the oil blocks have value (P1 – proven preserves and P2 – probable reserves), which means that they would have to make a payment for the blocks if they want them back.”
Ajumogobia, however, was emphatic that the request by the ministry to the IOCs is not tantamount to asking them to match or better the offer made by CNOOC. “This is not a bidding war. The CNOOC’s offer was just coincidental. After all, NNPC, as the majority partner in the JVs, reserves the right to sell down part of its stake to a third party without touching what the IOCs hold in the blocks.”
The minister disclosed that rather than make an offer that the government would find hard to resist, Shell has gone to court to challenge the government’s decision to renew the leases under different terms. Shell, along with other IOCs, is citing a provision in the Petroleum Act which stipulates that the acreages can be renewed for another 40 years under the same terms, insofar as they have met the conditions of the Act.
But the minister said that they have informed the IOCs that the same Act also allows the minister to impose new conditions for renewal, which “includes payment for the blocks, akin to a signature bonus.”
What next for National Assembly?
With all the intrigues playing out, questions are being asked about the continued delay on the part of the National Assembly in the passage of the PIB. The delay is playing to the advantage of the oil majors as the PSCs, renewed for one year in 2008, will soon expire again and the Federal Government will be unable to act.
Oil prices rise on weak dollar, supply worries
Crude oil futures rose yesterday as a weaker dollar and the prospect of tighter supplies provided new support to the market.
Light, sweet crude for November delivery recently traded 86 cents, or 1.2 per cent, higher at $71.27 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 83 cents, or 1.2 per cent, higher at $68.87 a barrel.
Oil prices hit a two-week high less than a day after sinking as low as $68.05 a barrel, as the dollar slipped against other world currencies.
Dollar-denominated crude becomes cheaper for holders of other currencies when the greenback weakens, and the foreign exchange market tends to direct oil futures when there is a lack of news that directly affects supply or demand.
The dollar was hit hard by a report in The Independent, a UK newspaper, that several major oil producers in the Middle East are quietly moving toward pricing their crude in other currencies.
Several producers denied that the shift was even being discussed, helping the dollar rebound and knocking oil down from its intraday high.
Analysts with Tudor, Pickering, Holt & Co. in Houston described the rumors as "worth watching," but noted that "changing rules in the world's biggest commodity game wouldn't be fast, wouldn't be easy and would be fought by the U.S."
Oil futures are back at the higher end of the trading range between $65 and $75 a barrel that's held since the end of May, after approaching the lower boundary in late September.
Lately, the shrinking spread between front-month November futures and the December contract has kept prices from straying too far below $70 a barrel.
When the front-month contract trades at a small discount, it normally indicates that there is strong near-term demand for oil.
The spreads have steadily narrowed to just 20 cents, since topping $2 in mid-August, which some market participants are taking as a sign that the long-awaited rebound in oil demand is just around the corner.
Global demand took a big hit during the economic downturn, and is expected to begin to recover in the final months of 2009.
It remains to be seen whether consumption will reach a point where refiners feel the need to draw on surplus oil inventories, however.
Supplies are still well above average, and analysts are estimating a 1.3-million-barrel increase in U.S. oil inventories in government data due out Wednesday.
Fuel inventories are also seen rising, with gasoline stocks expected to increase 1.2 million barrels and distillate inventories, including heating oil and diesel, seen increasing 400,000 barrels.
"Keep an eye on the spreads- if they should continue to tighten, that'll help front-month prices," said Tony Rosado, a broker with GA Global Markets in New York.
Front-month November reformulated gasoline blendstock, or RBOB, recently traded 2.10 cents, or 1.2 per cent, higher at $1.7749 a gallon. November heating oil traded 2.20 cents, or 1.2 per cent, higher at $1.8136 a gallon.
Oil Majors Move to Scuttle $50bn Chinese Offer
•Pressure mounts on N/Assembly as stake for host communities under threat
By Ijeoma Nwogwugwu and Constance Ikokwu, 10.07.2009
Concerns over the possibility of losing 16 prolific oil mining leases (OMLs) held for over 40 years by the international oil companies (IOCs) has led to intense lobbying and intrigues to delay the passage of the Petroleum Industry Bill (PIB) currently at the National Assembly. The PIB, which has gone through the third reading in both chambers of the National Assembly, will repeal several of the existing oil industry legislations and usher in a revolutionary era in the manner the oil and gas sector operates. But major multinational oil firms - Shell, ChevronTexaco, TotalfinaElf, Agip and Exxon-Mobil - have upped the ante through intensive lobbying in the National Assembly to delay the passage of the PIB until next year and force the hand of the Federal Government to renew their leases under existing terms before they finally expire at the end of this month. Specifically, the IOCs are concerned that the 16 oil blocks they have held since 1968 under joint venture contracts (JVCs), for which their leases expired between November and December last year and renewed for a year by the Yar’Adua administratiron, may form part of the 23 blocks currently being eyed by the Chinese National Offshore Oil Corporation (CNOOC). CNOOC recently made a $50 billion offer to the Federal Government to acquire a 49 per cent stake, translating to 6 billion barrels in oil reserves in 23 of the oil leases held by the IOCs. In its quest to acquire 6 billion barrels of oil, the CNOOC, acting under the auspices of Sunrise Consortium, applied for 49 per cent equity participation in the following blocks: i. OMLs 67, 68, and 70; ii. OMLs 11 and 13; iii. OMLs 71, 72, 74, 77, 79, 83, 85, 86, 88, 89, 90, 91, 95, 118, 127, 133, 139 and 140. All the blocks are held by the IOCs. The request is being given consideration as instructions have gone out for the data on the blocks to be released to Sunrise by the Department of Petroleum Resources (DPR). In addition, a negotiating committee has been set up in NNPC to handle discussions with the company. The committee is to consider the request and determine an optimum price for the reserves in the blocks against the backdrop of the offer made by CNOOC. The oil companies had expected the automatic renewal of licences which expired last year. But the Federal Government stalled that move, preferring to renew them for only one year in order to take into account the realities of the present times with the passage of the PIB. However, the IOCs are currently pushing hard to get the 16 expired leases renewed a second time under long-term leases that would carry similar terms and conditions as the subsisting JV leases. But the government has balked at the idea of renewing the expired leases for longer periods because it is conscious of the fact that the PIB would usher in an entirely new regime that would require the incorporation of the JVs and even change the terms for the existing Production Sharing Contracts (PSCs) governing newer leases yet to expire. Furthermore, a delay of the passage of the bill would stall efforts by the Federal Government to give a stake in the existing oil leases to the oil communities in the Niger Delta as contained in the draft legislation with the parliament as now being proposed. President Umaru Musa Yar’Adua, it was gathered, is eager to see the oil communities get some interest in the oil leases operated under the JVCs, which will be hived out from either the Nigerian National Petroleum Corporation’s (NNPC’s) or the oil major, or both stakes. A clause in the proposed PIB provides for compensation to the oil communities in the Niger Delta by giving them a sense of ownership for natural resources drilled from their backyard. But the companies would prefer that the communities get their share of oil proceeds only through the Federal Government's stake in the JVs while they keep their 40 per cent of the deal. In a memo written by the NNPC which was obtained exclusively by THISDAY, a breakdown of the 23 blocks shows that 18 are currently held under joint venture arrangements while the remaining five are operated under the PSCs. Of the JV blocks, 16 expired late last year while two are due for renewal in 2019. Also, virtually all the expired blocks are located in the continental shelf (shallow offshore) except the two unexpired ones that are located onshore. The PSCs were only recently converted to OMLs and are not due for renewal until 2020 at the earliest. Expectedly, all the PSC blocks are located in the deepwater and belong in the first set of deep offshore blocks awarded in the 1993 licensing round. A further analysis shows that seven of the oil blocks are held by Shell Petroleum Development Company (SPDC) of which five expired in November 2008; four are held by Exxon-Mobil of which three expired in December 2008; 10 are held by Chevron of which eight have expired; one is held by Shell Nigeria Exploration and Production Company (SNEPCO – Shell deep offshore subsidiary); and one is held by TotalfinaElf. If the PIB is passed, it will not be business as usual because the IOCs will have less influence in the operations of the incorporated joint ventures (IJVs), which will now be restructured to reflect the new ownership structure, board composition and management of the leases. For a long time, the general perception was that the Federal Government has not been getting the best possible deal under the JVs because even though NNPC currently holds a majority stake of 57 per cent across board and is supposed to provide its share of the funding in proportion to its equity stake in the contracts, it has long been suspected that the JVs are entirely funded by the Nigerian government when the cash calls are paid. With the passage of the PIB, Nigeria through NNPC will have a say in the day-to-day operations of the JVs, will be able to monitor how they are funded by all the partners in the agreement and will cease to be reliant on the Federal Government for the funding of the leases, as the IJVs can raise money from markets under commercial terms. Similarly, the PIB proposes to review several of the contract terms for the PSCs, particularly those governing the older PSCs signed in 1993, which conceded zero per cent royalties to the IOCs, among other unfavourable terms. The bill will result in the repeal of the Petroleum Act of 1969 as amended, Petroleum Profit Tax Act as amended, the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1999 as amended, the NNPC Act and PPPRA Act. Also, the Oil Pipelines Act, Associated Gas Re-injection Act and Regulations, Petroleum Equalisation Fund Act and Petroleum Technology Development Fund Act and other laws might also be repealed in the process. THISDAY learnt that the companies are hoping that if they are able to successfully mount pressure on the National Assembly to delay the bill, they can win the fight. High stakes politics has since engulfed the industry with the Chinese lobbying to acquire substantial interests as well. They are said to be very adept at campaigning for a non-renewal of the licences of oil majors. It is further expected that the bill would enable the government to restructure the NNPC into a profit-driven company as obtained in other oil producing countries. It will also lead to the creation of the National Petroleum Directorate that will be responsible for policies in the oil and gas sector and the creation of several new companies, including the Nigerian Petroleum Inspectorate (NPI), the National Petroleum Products Regulatory Authority (NPPRA), the National Petroleum Assets Management Agency (NAPAMA) and the Nigerian National Oil Company Ltd (NNOC) as the successor to NNPC. Others are the Nigerian Petroleum Research Centre (NPRC), and the National Frontier Exploration Service. The Petroleum Technology Development Fund and Petroleum Equalisation Fund would also be restructured in line with the oil and gas policy. The Minister of State for Petro-leum, Mr. Odein Ajumogobia, a member of the Presidential Advisory Council on Petroleum, Dr. Muhammed M. Ibrahim and the Secretary/Legal Adviser of NNPC, Professor Yinka Omorogbe, have all described the bill “as a most comprehensive piece of legislation creating a legal and regulatory framework that was transparent, effective and 21st century compliant”.
Niger Delta: The Time is Now…
10.04.2009
With the surrender and acceptance of the amnesty programme of President Umaru Yar’Adua by the major militant leaders in the Niger Delta including Government Ekpemupolo (a.k.a. Tompolo), Ateke Tom, Henry Okah, Ebikalowei Victor Ben (a.k.a. Boyloaf) and others, the President has won a major battle without firing a single shot. But the war against poverty, underdevelopment and marginalisation in the Niger Delta remains a huge challenge. Ateke gave the President his 49th Independence Anniversary gift on October 1 and Tompolo, after initial wavering and scepticism, decided to surrender yesterday evening, the eve of the expiration of the 60-day period the federal government gave all militant groups fighting in the Niger Delta to hand over their weapons to the amnesty committee chaired by Defence Minister Godwin Abe. By their action, the militants have voted for a peaceful resolution of the protracted crisis-bedevilling region. It can now be proclaimed without hesitation that this administration’s amnesty programme is an accomplished mission and a resounding success.
Indeed, the achievement of the President in this process is a vindication of the option of dialogue and political solution in a peaceful environment. The President called on the militants to end violence in the creeks so that all stakeholders would have a peaceful ambience to address the roots of the problems in the region. It is a good day for Nigeria that the militants by their action in the last 60 days have hearkened to this national clarion call. We salute the political wisdom in the President’s action. He has given leadership at a decisive moment. What Yar’Adua has achieved with this unique amnesty programme recommends itself for a Nobel Peace Prize. It is a victory for patience, tolerance, and sense of magnanimity and accommodation of even otherwise irritating tendencies.
However, this accomplishment represents only an important first step in the ultimate resolution of the Niger Delta Question. By this uncommon act of the militants, it is now clear to any one in doubt that the people of the Niger Delta love and they accept the sovereignty of the Federal Republic of Nigeria. This now puts the ball squarely in the court of the government. The next urgent question is this: what happens after the amnesty? While we salute the courage and sincerity of the militants for acting wisely by handing over their weapons unconditionally and giving peace a chance, we call on the federal government to respond immediately and decisively to the continuing yearning of the people of the Niger Delta by meeting them at the point of their needs and aspirations. This is simply because it is a settlement founded on justice and equity that will make the hard-won peace to endure. The Yar’Adua categorical response we propose should be in at least four areas. First is the immediate rehabilitation and integration of the former militants into the civil society in a manner that would make militancy an unattractive option.
Secondly, government should without delay unfold its programme of massive infrastructural development of the region along with human capital development. To be convincing in this regard, the government’s programme should go beyond the tokenism of such bodies such as the Niger Delta Development Commission (NDDC) and the Ministry of Niger Delta. The people of the region have endured poverty, underdevelopment and injustice for too long. History beckons on Yar’Adua to be the President that would massively develop the Niger Delta with transport infrastructure, electricity and water supply even beyond the quality and standard of Abuja, the federal capital which the Niger Delta people see as a city replete with bridges without waters while the Niger Delta communities are suffused with waters and creeks without bridges. He should rise to the occasion and face the developmental challenge of the region squarely while the state and local governments as well as oil companies do their own proportionate bits. This phase of the resolution of the crisis should be taken even more seriously and urgently. The report of the various Niger Delta Committees should provide a useful road map in this regard.
Thirdly, for a definitive resolution of the crisis, the people of the region should be given a genuine sense of ownership of the wealth accruing from their land. The government should take advantage of the review and re-enactment of the Petroleum Industry Bill before the National Assembly to ensure that oil-producing and transporting communities own shares and equities in all prospecting licences across the region.
Fourthly, the on-going reforms of the petroleum sector should result in the full and complete participation of the people from the region at all levels of the extractive activities from prospecting to drilling, transport and sales; the people of the region should be key players in the upstream and downstream activities. Youths from the region will in turn find expression and employment as these activities boom in a peaceful atmosphere. This would further cement the sense of ownership.
The four steps sketched above coupled with the other political solutions that are being proposed by stakeholders for constitutional review should lay a solid foundation of justice and equity upon which peace and prosperity will flourish in the Niger Delta.
President Yar’Adua should seize the moment and consummate this history-making process by responding immediately in the post-amnesty period which begins this midnight; he should make development and justice a matter of priority and urgency. His laudable accomplishment in the area of amnesty gives hopes that with the necessary political will, justice and development can also be brought about in the region. And history will be infinitely kind to Yar’Adua for such a statesmanlike action.
As the President said in his inaugural address to the nation on May 29, 2007, “the time is now”.
Chinese Firm Mum over Nigeria Oil Deal
From Ejiofor Alike with agency report, 09.30.2009
China National Offshore Oil Corporation (CNOOC) has refused to comment on reports that it was negotiating lucrative oil blocks with the Federal Government.
This came shortly after the Movement for the Emancipation of the Niger Delta (MEND) warned Chinese firms not to invest in the oil-rich region until a permanent peace deal has been achieved.
The Financial Times had reported yesterday that CNOOC was bidding for six billion barrels of Nigeriaís oil in a deal worth about $30 billion.
But spokesman of MEND, Jomo Gbomo, warned the Chinese firm in an emailed statement yesterday not to go ahead with the deal until permanent peace is attained in the region.
MEND said: The Chinese should be careful about investments until there is justice in that region. We can guarantee that if the government of Nigeria fails to address the root issues, the Chinese will regret they were negotiating with the wrong people.”
Meanwhile, Yang Hua, President of CNOOC Ltd the listed arm that has been the main vehicle for the company's overseas investment, had declined to comment.
‘You know my standard answer - no comment,’ Yang told Reuters when asked if he was aware of the FT report.
CNOOC's spokesman Xiao Zongwei said he had never heard of the development reported in the paper.
The FT said the deal was detailed in a letter it had seen from the office of President Umaru Yar'Adua, to CNOOC's representative.
But a senior industry source told Reuters that several of the 23 Nigerian oil blocks being eyed by CNOOC are either close to expiry or under litigation.
The source said most of the licences operated by Shell, Chevron and ExxonMobil had originally expired in November and December 2008.
‘Chevron and ExxonMobil won a year's extension to the rights, meaning their licences are due to expire later this year, while Shell successfully sought a court injunction allowing it to continue to operate its blocks while it challenged the expiry,” the source said. If the Chinese bid is successful, it could place the company in competition with major western groups including Total, Shell, Chevron and ExxonMobil, which operate the 23 blocks under discussion, the newspaper said.
“The industry is aware locally that there is an interest from Chinese national oil companies to acquire oil blocks in Nigeria,’ an oil industry source said.
Analysts said the leak appeared to be an effort to put pressure on long-standing Western oil partners in Nigeria at a time when relations with the industry are strained.
“For some time relations between the government and the international oil companies have been difficult, first over funding of joint ventures, over arrears, reviewing the terms of production sharing contracts (PSCs),’ Antony Goldman, Head of London-based PM Consulting and a Nigeria expert, told Reuters.
“Some of these licences have come up for renewal and the government feels they are worth more than the international oil companies are prepared to pay to renew them," he told Reuters.
So far the largest investment CNOOC has made in Nigeria was a $2.69 billion stake purchased in 2006 in deep-water block OML-130, which operator Total said in March had started pumping oil to reach 175,000 barrels per day output during the summer.
But President Yar’Adua’s Economic Adviser, Dr. Tanimu Yakubu, said in the FT report that China may not secure ìanything close to the 6 billion barrels it is seeking, saying: ‘We want to retain our traditional friends.’
He added, however, that the Chinese ìare really offering multiples of what existing producers are pledging (for licences). We love to see this kind of competition.
In a recent Chinese acquisition of Nigerian oil assets, Sinopec paid $7.24 billion for Swiss-based Addax Petroleum, which operates in Nigeria and other African states.
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Oil prices slide further on U.S. weak energy demand
OIL prices fell further yesterday, following data that revealed weak energy demand in the United States, the world's biggest economy.
New York's main contract, light sweet crude for November delivery, dropped 28 cents to $68.69 a barrel.
Brent North Sea crude for November delivery slipped 18 cents to $67.81.
A widely-watched Department of Energy report released Wednesday showed US crude reserves rose 2.8 million barrels in the week to September 18, against analysts' expectations of a decline.
Stocks of distillates, which include heating fuel, rose by three million barrels last week. Distillates are being closely monitored ahead of the northern hemisphere winter when demand for heating fuel peaks.
"At present, US distillate fuel demand remains weak, being depressed by the US economic downturn in the past year," the Commonwealth Bank of Australia said in a note yesterday.
Oil prices tumbled nearly $3 on Wednesday in reaction to the data.
"Crude prices slid nearly four per cent yesterday (Wednesday) and have continued lower... after inventory numbers once again highlighted oil consumption is in no way recovering as well as the broader economic conditions are," said Sucden Financial Research analyst Nimit Khamar.
"Distillates rose three million barrels to a fresh 26 year high. These builds coming despite a fall in utilisation of 1.3 per cent amid a large rise in imports and weak demand."
Energy demand has plunged after the global economy slipped late last year into its worst recession since the 1930s.
This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December.
Prices have since recovered somewhat but investors remain concerned over the pace of the upturn.
Traders were turning their attention to the Group of 20 summit yesterday, and today in the US city of Pittsburgh where developed and developing nations were to discuss the state of the global economy.
"In Pittsburgh, we will work with the world's largest economies to chart a course for growth that is balanced and sustained," US President Barack Obama told the United Nations on the eve of the G20 summit.
"And that means... strengthening regulation for all financial centres, so that we put an end to the greed, excess and abuse that led us into disaster, and prevent a crisis like this from ever happening again."