No Document On Crude Oil Swap – PPMC

No Document On Crude Oil Swap – PPMC
Bode Gbadebo, By GEORGE OKOJIE
— Jan 21, 2016 2:43 am | Leave a comment
Members of the House of Representatives Ad-Hoc Committee probing Refined Product Exchange Agreement/Crude Oil Swap were shocked at yesterday’s hearing when the newly appointed managing director of Petroleum Products Marketing Company (PPMC), Esther Nnamdi-Ogbue, told them that there was no document to show that there were other processes taken other than presidential and ministerial directives regarding lifting of oil in the oil swap deals between Duke Oil and Trafigura.
“We don’t know under what circumstances it (the contracts) was done as all of us are new; most of the dealings were done before our appointment.
“Before us, a lot of things happened; we met a lot of things as inconclusive, and this has led us into reconciliations which are still ongoing.
“We discovered that some contractual agreements were not favourable to PPMC, which was why we went into the reconciliations. I don’t want to jump into conclusions, but I should be clear that oil swap is practised globally,” she said.
When the committee asked if due process was followed in the selection of trading companies involved in the deals, the Petroleum Resources Ministry’s team said records at its disposal showed that the arrangement was carried out through presidential approvals.
The committee requested to see the presidential approval in question and the PPMC eventually presented one, but this was rejected by the committee on the ground that it was a wrong approval: it was an Offshore Processing Agreement (OPA) and not an oil swap agreement.
The committee was therefore informed that there was a ministerial approval for the swap arrangement in August 2010. It was also revealed that lifting of crude oil began before the contract was consummated.
The House Committee then inquired if a minister had the legal power to approve contracts of such magnitude.
It was at this point that the committee resolved to summon the former NNPC and PPMC chief executives involved in the arrangements in the past years.
The public hearing which began on Tuesday will continue tomorrow with trading companies and other stakeholders expected to make submissions before the panel.
Meanwhile, two former Group Managing Directors (GMD) of the Nigerian National Petroleum Corporation (NNPC), Austine Oniwon and Joseph Dawha alonh with the immediate past Managing Director of the Petroleum Products Marketing Company (PPMC), Haruna Momoh, have been summoned by the House of Representatives Ad-Hoc Committee probing Refined Product Exchange Agreement/Crude Oil Swap.
Oniwon, Dawha and Momoh are to appear before the panel alongside other key officers connected with the crude oil swap arrangement since 2009.
Although no date has been fixed for their appearance by the Hon. Zakari Mohammed-led committee, but their invitation followed the apparent disregard for due process in the consummation of oil swap agreements with the oil companies contracted.
LEADERSHIP recalls that the controversial oil swap agreements and offshore crude oil processing agreements were all terminated in September 2015 and to end in January 2016. The swap concept is to be replaced with Improved Offshore Processing Arrangement (IOPA).

Nigeria losing N470m daily to Escravos gas pipeline bombing
Indications have emerged that the country is currently losing N470 million daily to the weekend’s attack on the Nigeria Gas Company’s pipeline connected to Chevron Nigeria Ltd’s facility at Escravos by Niger Delta militants
This was revealed in a statement signed by the special adviser on Communications to minister of Power, Works and Housing, Mr. Hakeem Bello, and made available to journalists.
It said the attacks will impact negatively on the Olorunsogo NIPP plant (capacity 600MW) and other Power Plants .
The statement revealed that the sabotaged gas pipeline “which contributes to the Escravos Lagos Pipeline System (ELPS), has led to a loss of 160mmsfcd of gas daily. At a cost of $2.50 per thousand scf, this loss means about $400,000 loss to the country on a daily basis (N78,800,000 daily) in gas volume.
“This is in addition to losses to be incurred daily from affected power generation ($1,988,223 or N391,680,000 daily). The total daily loss to the country is therefore estimated at N470,479,931. Repairs of the damaged pipeline is estimated as costing ($609,137 or N120,000.000).”
According to him, the real sector of the economy has also been counting its losses as some cement companies around Olorunsogo, like Ewekoro and Ibese, are also affected.
“The latest incident occurred just as the federal government, through the Ministry of Power, Works and Housing and the Ministry of Petroleum Resources, along with allied agencies, has been making concerted efforts to improve gas supplies to the power plants. Such efforts led to previously offline plants like Ihovbor and Sapele coming back online and the subsequent output making up for the loss in power. The pipelines are being actively monitored for further attacks or other unforeseen impacts.
“Available records show that six incidences of vandalism from December 2014 to February 2015, which affected the Trans Forcados Pipeline (at Oben, Sapele, Oredo) and Escravos Lagos Pipeline System (CNL), led to a loss of 1,100 MMScfd. According to industry experts, a loss of 200 MMscd is equivalent to a power reduction of 700MW.”
He note that while the industry is currently generating about 4120Mwh/h on average (as at 17/01/2016), it is without doubt that performance would have been better without the additional setback caused by the weekend’s incident.
LEADERSHIP recalls that during the monthly meeting of the minister of Power, Works and Housing, Mr Babatunde Fashola, with operators in the power sector last week, the Nigeria Gas Company (NGC), the Nigerian National Petroleum Corporation (NNPC) and the GACN, led by the Minister of State of Petroleum, Dr Ibe Kachikwu, shared information on significant gas projects that will improve gas supply which are scheduled for completion in Q2 of 2016.
It also highlighted some of the challenges especially related to security affecting delivery of gas to the power sector.
In response to this, the NNPC is forming a security committee – NNPC, Police, JTF (which includes Army, Airforce and Navy) and also community vigilante groups, which have been tasked with the responsibility of securing these pipelines.