Sweetcrude June Edition by Sweetcrude reports

Finance

2015 June, SweetcrudeReports

Mobil fuel station KUNLE KALEJAYE

obil Oil Nigeria Plc, MON, has reported a turn over of N79.6 billion and profit after tax of N6.4 billion in 2014, which represents an increase of one percent and 84 percent respectively compared with 2013 performance. Chairman and Managing Director of the company, Mr. Adetunji Oyebanji, disclosed this to shareholders while presenting the annual report and financial statement at the company's 37th Annual General Meeting, saying the turnover includes an aftertax gain of N2.6 billion on disposal of a surplus property. Oyebanji explained that the proceeds of the property disposal were re-invested in the company's Court Refurbishment Projects. "Excluding this gain, profit after-tax was N3.8billion, which was 10 percent higher than 2013," he said, adding: "I am delighted with this impressive result, which is an outcome of unflinching hard work, dedication and commitment of the entire management and staff of your company".

Mobil Oil Nigeria reports N79.6bn turnover ...Approves dividend of 660k per share However, Oyebanji noted tank and converting another that the results were tank for diesel storage. adversely impacted by "These will increase our government controlled fixed storage capacity and provide margin on gasoline and greater flexibility for our kerosene as well as the supply operation. Additional disruption in the second half of investments are ongoing to the year. upgrade our loading rack and He also told shareholders tank farm for improved that in the year under review, operating safety and the company recorded another efficiency," Oyebanji said. sales record in the nonCommenting on the regulated sector. continued delay in the "Our premium lubricants reimbursement of subsidy brands continue to attract â&#x20AC;&#x17D; claims, Oyebanji said "the patronage of our customers stated. deduction of withholding viability of fuel business is and we continue to provide He was also pleased to taxes at applicable rates, jeopardised. world-class engineering "We sincerely hope, informed shareholders that adding that the dividend support services. d e s p i t e t h e e c o n o m i c represents an increase of 10 therefore that government "If both prices and margins condition in the country, the percent over last year and w i l l r e c o n s i d e r t h e can be moved with real costs Board of Directors reviewed thereby balances the need to recommendations that have and the industry is liberalised t he 2 0 1 4 result s a nd pay shareholders a fair already been made by Major and freed, I believe that approved a dividend of 660 return with the need to Oil Marketers Association of MON's fuels business can Nigeria on this subject and kobo per 50 kobo share. retain funds in the business. quickly become profitable to that some relief with regards The approved dividend, He also informed that the the benefit of MON and the according to the managing c o m p a n y i s c u r r e n t l y to gasoline and kerosene Nigerian economy," Oyebanji director, is subject to constructing a new gasoline margins will be granted."

Our premium lubricants brands continue to attract patronage of our customers and we continue to provide world-class engineering support services

2015 June, SweetcrudeReports

Finance KUNLE KALEJAYE

epot and Petroleum P r o d u c t Marketers Association, DAPPMA, has insisted that the Federal Government still owes depot owners and fuel importers over N291 billion under the Petroleum Subsidy Scheme, PSC, as u n p a i d s u b s i d y reimbursement, interest on delayed payment and foreign exchange differentials. DAPPMA explained in a statement that both depot owners and fuel importers were yet to be paid their subsidy claims after the Senate Committee on Petroleum (Downstream) at a meeting with major petroleum industry stakeholders, persuaded Petroleum Tanker Drivers, PTD-NUPENG, and the National Association of Road Transport Owners, NARTO, to call off their strike on Monday, May 25, 2015 and resume loading of fuel from various depots that had stock. DAPPMA's Executive Secretary, Mr. Olufemi Adewole, said both his association and Major Oil Marketers Association of Nigeria, MOMAN, received a letter from the former Minister of Finance and Coordinating Minister for the economy, Dr. Ngozi Okonjo-Iweala, reaffirming that the Federal Government still owed depot owners and fuel importers billions of naira under the P S C a s s u b s i d y reimbursement and interest differential on foreign exchange A copy of the letter was released to the Senate Committee for reference, he said. "However, the letter did not

DAPPMA claims govt owes oil marketers N291bn subsidy fund

Fuel depot

state the timeline for the reverification exercise which the minister instituted on the amount she disputed and also did not state the expected date of payment which PSF participants had been clamouring for in all the meetings held with the former CME/HMF since February 2015," Adewole said. He maintained that this was the first time since the establishment of the petroleum subsidy fund scheme that marketers would not have ready and easy access to fuel import loans as it is also the first time that commercial banks would notify importers that based on CBN

DAPPMA’s initial assertion on petrol importers and marketers who participate in the petrol subsidy scheme and are therefore entitled to subsidy reimbursement is based on the widely circulated payment list from the Federal Ministry of Finance, which was published in several newspapers regulations, they (importers) have attained their credit ceilings with their various banks and would have to make some refunds on the existing loans

Vandalism: NNPC loses N40.8bn in 2014

he Nigerian N a t i o n a l P e t r o l e u m Corporation, NNPC, says it and its downstream subsidiary, the Pipelines and Products Marketing Company, PPMC, suffered petroleum products losses worth N40.8 billion through pipeline vandalism in 2014 as it stressed that no business could survive such a loss and still remain a going concern. Managing Director of

PPMC, Prince Haruna Momoh, who disclosed this in a statement made available to our correspondent, stated that there was an increase in pipeline vandalism and that in 2013, the Corporation recorded 3517 vandalised points but in 2014 the figure increased to 3,774. He observed that as at today, 97 pipeline vandals are undergoing prosecution and regretted that since the cases started a few years ago none of the accused persons have been convicted for economic

sabotage. He called on Nigerians from all walks of life, especially those living in communities where the pipelines run through, to protect them in the national interest. Meanwhile, the NNPC has revealed that it has 1.2 billion litres of premium motor spirit (PMS) otherwise known as petrol, in stock, enough to end the on-going fuel scarcity. The figure, according to the statement, translates to

to the sector prior to being funded for petrol imports. Adewole continued: "Due to debts owed transporters by marketers, who have been experiencing serious financial stress due to 31 days sufficiency going by the 40 million daily consumption of the product in the country. He further stated that 21 additional vessels laden with petroleum products are offshore Lagos waiting to berth. He said the NNPC had m a d e a d e q u a t e arrangements to ensure energy sufficiency in the country and reassured motorists that the noticeable queues at the filling stations would thin out in the days ahead.

outstanding debts owed them by the Federal Government as a result of petrol imports under the petroleum subsidy scheme, the PTD-NUPENG and NARTO had at various times protested non-payment of their freight charges by withdrawing their services hence it is unfortunate for anyone to insinuate that marketers are blackmailers holding the nation to ransom via a strike about which they know nothing. "DAPPMA’s initial assertion on petrol importers and marketers who participate in the petrol subsidy scheme and are therefore entitled to subsidy reimbursement is based on the widely circulated payment list from the Federal Ministry of Finance, which was published in several newspapers. "The publication detailed payees and other ‘PSF scheme’ participants even when there was no payment due to them and the name of Capital Oil and Gas Industries Limited was conspicuously missing; however further investigations have confirmed that the company is indeed being owed an undisclosed amount which however cannot be confirmed to have been added to the figure released by the former CME/HMF.

2015 June, SweetcrudeReports

Finance

Afren drill workers

fren Chief Executive Officer Alan Linn says the company delivered a solid first quarter result despite the continuing low oil price as he wooed shareholders to support a new funding structure that would see Afren deliver longterm value and attractive future. “Afren has delivered a solid first quarter result despite the continuing low oil price," he said, adding: "We have already significantly curtailed immediate capital expenditure and are now working with our partners to optimise forward investment in development projects in Nigeria. "Business and process streamlining has commenced and we expect to begin seeing improved bottom line results from these efficiencies across the business as 2015 unfolds". The re-assurance came as the UK firm announced plans to receive $93 million in net cash proceeds, after a difficult financial year. Under the arrangement, holders of the company’s 2016, 2019 and 2020 notes would subscribe for further new senior notes up to the maximum level permitted of $369 million. This will result in Afren

Afren delivered 'solid first quarter result', says CEO Woos shareholders on new funding structure SAM IKEOTUONYE receiving an additional $93 million to the $200 million interim funding announced in April 2015. Afren’s revenue dropped 52 percent from 1Q 2014 to 1Q 2015, its recorded revenue in

1Q 2015 being $138.7 million, compared to $269 million during the same period in 2014. The fall in revenue was due to lower oil prices and production liftings from the company's Nigerian Ebok field, which were used to

settle a net profit interest liability, according to the company. Afren’s 1Q 2015 net production was 36,035 barrels of oil per day. This was above FY guidance range but in line with company expectations. Linn also assured that the company "would be working

Shareholders task SEC on unclaimed dividends

ome shareholders have asked the Securities and Exchange Commission, SEC, to champion the C a p i t a l M a r k e t Stakeholders’ Forum to address problems associated with unclaimed dividends. They said the disturbing unclaimed dividends of N50.94 billion as posted by the Institute of Capital Market Registrars, ICMR,

in Dec. 31, 2013 was retarding market growth. The Chairman, ICMR Council, Mr Bayo Olugbemi, said the figure represented 5.05 per cent of the total dividends declared for the past 10 years. The shareholders, however, called on the management of SEC to organise regular market wide stakeholders’ forum to proffer solutions to the menace. A l h a j i G b a d e b o

Olatokunbo, Founding Member, Nigeria Shareholders Association, said sincere stakeholders’ forum would go a long way in finding lasting solutions to unclaimed dividends’ problem. Olatokunbo attributed the problem of unclaimed dividends to multiple entries and shareholders’ inability to notify their registrars of change in postal addresses. He said that postage of

with shareholders in the coming weeks to explain the benefits of our proposed new funding structure and encourage them to support us in resolving our financing issues in order for Afren to deliver the long-term value and attractive future I see for the company.”

electronic annual reports by registrars rendered unclaimed dividends information useless, noting that, many shareholders were not aware of their unclaimed dividends status. Olatokunbo stressed the need for companies to continue to forward hard copies of unclaimed dividends details to shareholders and stop incorporation of the information in electronic format.

2015 June, SweetcrudeReports

Finance

he Bureau of P u b l i c Enterprises, BPE, has commenced the process for the privatisation of the Bank of Industry with the appointment of advisors for the exercise. Mr Rasheed Olaoluwa, the bank's Managing Director, revealed in Lagos that the Federal Government has so

BPE begins process of privatising BOI far made much progress on the privatisation of the bank. With the privatisation, the bank would be able to get more funds for its development

mandate. BoI’s authoriised capital currently stood at N250 billion, of which N146 billion was paid up, adding the bank still had some gaps

to fill. “You are all aware that government has been taken steps to privatise BoI. The BPE has opened financial

bid for the appointment of advisors. "We don't know the percentage that will be sold; all we know is that it is going to be partial privatisation," Olaoluwa said in Lagos. He added: "Beyond recapitalisation, our capital has always come from government but we are taking steps that will enable us look for funding from other sources and that is why we are doing some ratings". The BoI boss said the need to get more funding for the bank's operation h a d m a d e t h e management to embark on aggressive recovery of its non-performing loans.

In Nigeria, among the commercial banks, the average in the industry is about six to seven per cent

BOI head office, Abuja

Forensic audit for NDPHC accounts

he accounts of the Niger Delta Power Holding Company, NDPHC, will be undergoing forensic audit following approval to that effect by the board of the company. According to ex-Gov. Ibrahim Dankwambo of Gombe State, who disclosed this to State House correspondents in Abuja, this was the outcome of the last meeting of the board before the tenure of the ex-

President Goodluck Jonathan administration ended on May 29. The meeting was chaired by then Vice-President Namadi Sambo. Dankwanbo said the audit report was aimed at ensuring accountability and transparency as well as achieving adequate power distribution in the country. "With today’s approval (of the audit) 2013/2014 statement of accounts of the Niger Delta Power Holding Company would have been made up till date for onward

transmission to whoever is interested in getting to know the truth financials of the company that we have managed. "Also, the demarcation was that 2005 to 2012 was a single company that was formed, the Delta Power Holding Company, the different is that in 2013 and 2014 that has been fragmented into several other companies. Very soon before the audit will be concluded and that will also be signed," he said. The

Managing Director of the company, Mr James Olotu, who also addressed the correspondents on the outcome of the meeting, said 265 out of the 296 distribution power projects initiated by President G o o d l u c k J o n a t h a n ’ s administration h a d b e e n completed.

He stated that unlike in the past when the volume of nonperforming loans was relatively high, the bank had reduced it to below five per cent within a short period. Olaoluwa said that the bank had even gone as far as blacklisting defaulters, adding that the volume of the bank's non-performing loans was relatively high in the past, but the bank had embarked on initiatives to manage it downward, including loan recovery. "The development bank in Brazil, their NPL is 2.6 per cent; the development bank in South Africa is 16.2 per cent. "In Nigeria, among the commercial banks, the average in the industry is about six to seven per cent. That we are able to reduce it to below five per cent in BoI is highly commendable,” he said.

2015 June, SweetcrudeReports

Finance

Oil workers

embers of t h e National Union of Petroleu m and Natural Gas Workers, NUPENG, have asked the Asset Management Corporation of Nigeria, AMCON, to pay the N3 billion belonging to its members. Chairman of the Seawolf Branch of NUPENG, Christian Okoji, said the corporation had been owing the workers for 18 months, including their salaries and terminal benefits. He said as he led a protest march to the AMCON head office in Abuja, “Precisely December 2013, AMCON came and bought the company. So when they came, they assured us that they are going to change the system because the former management was having financial constraint. “Based on that, they came and asked us to denounce our former company and send all our personal data to them and from that moment they will be paying the salaries.” Okoji explained that AMCON only paid them for two months, December 2013 and January last year respectively. “We have been working, the three rigs, one of the rigs

Oil workers insist on N3bn payment from AMCON was working with Total, one with Addax and the last with Conoil. They were all working making good money. The least payment for those rigs was about $130,000 per day. So the rigs were making so much money. At the end of the day, AMCON refused to continue the payment of salaries. So

our union called them to order to know the fate of the workers and know why AMCON has refused to pay their members." Responding for AMCON, its Executive Director, Credit, Abbas Mohammed Jega said Seawolf is owing AMCON and it can not pay

the protesters until the company pays them. Explained he: “Now Seawolf took a loan from First Bank and bought rigs and they couldn’t operate the rigs very well and they were losing money, they were losing contracts, they couldn’t pay back the loan to First Bank. So First Bank

African economies grew by 3.9 per cent GDP in 2014 —AfDB

frican economies registered 3.9% average GDP growth in 2014 compared to the 3.7% in 2013, according to the African Development Bank Group, AfDB. This reflects resilience to global and regional shocks which affected the continent last year, the Bank said in its recently released annual report. Despite the negative impacts of low commodity prices, the Ebola epidemic in West Africa as well as the

fundamentalist and military insurrections witnessed in many countries, the continent achieved considerable growth, but with sharp variations between regions and countries. In relative terms, Africa’s economic growth was higher than the 3.3 percent global average in 2014. Western Asia recorded 2.9 percent, while Latin America and the Caribbean grew by 1.2 percent. Africa, however, grew slower than the

emerging markets and developing economies of the world, which registered 4.4 percent growth. East Africa emerged as the best performer with a 7.1percent average GDP growth. Ethiopia, Rwanda, and Tanzania outstandingly grew at 10.3, 6.1, and 7.1 percent, respectively. West Africa followed with growth averaging 6.0 percent, a commendable performance in the light of conflicts in the region, the Ebola crisis, and the decline in oil prices. Nigeria, which rebased its

asked us to buy the loan so we bought the loan from First Bank and we called the owners of Seawolf to come and pay their loans, come and tell us how you want to pay the loan, for over a year we were looking at the figures we couldn’t agree, Seawolf is not in a position to do business and to pay the loans.”

economy earlier in the year, posted a 6.3 percent growth. Central Africa recorded an average of 5.6 percent, reflecting considerable resilience to shocks, including military insurrections and the decline in oil prices. Gabon, which grew at 5.1 percent, saw the expansion in nonoil sectors, especially timber processing, making up for the fall in oil prices, while the main drivers of the 8.9 percent growth in the DRC were mining, agriculture and infrastructure investment.

2015 June, SweetcrudeReports

Labour

2015 June, SweetcrudeReports

Refinery

KUNLE KALEJAYE

a c k - u p workers in W a r r i Refining and Petrochemica l Company, WRPC, have petitioned President Muhammadu Buhari to intervene on their current work condition, stating that the management of the company owes them eight months salaries. In a letter to President Buhari signed by Citizen Mike Eromosele, the backup workers, more popularly known as casual workers, said that in the course of asking for their salaries and a better working condition from the management of WRPC, they have faced harassment and threats. "As we write you now, sir, some of our colleagues have been sacked while others are told to forfeit the eight months salaries because NNPC (Nigerian National Petroleum Corporation) is owing the Federal Government some money. "The Management of WRPC has introduced what is called slash of salaries and allowance to all back-up staff without due consultation from or with the back-up workers to give a consideration on their welfare," the letter read.

Warri Refinery workers petition Buhari over work condition, welfare constantly carryout capital projects with amount of money that are of no benefit to the production process, but which are of personal interest to them, where they can get their percentages. "Sir, some of the backup staff in WRPC are graduates with degrees (masters degrees also) in our various fields of learning. Some also are professional skill workers in our technical areas of study. Some of us have worked in this organisation for the past six It continued: "They also put "They claim not having t o t e n y e a r s w i t h o u t a cut down (slash) of 25 funds to meet up with our knowing our fate in life". percent reduction of the salaries, but we keep seeing The petition added that backup workers' stipend the arrival of new cars for the back-up workers were wâ&#x20AC;&#x17D; i t h o u t p u t t i n g i n t o their personal use. We also made to pay for pension consideration the after-effect notice that on daily basis scheme and National Health of it on the well being of the t h e y k e e p m a k i n g Insurance every month from back-up staff. employment when they the little stipend given to "For instance, a graduate cannot pay those of us them, alleging that some that is receiving as low as working here for the past group of management staff N35,000 as his monthly years. converts this money into stipend will be going home " B e c a u s e t h e y h a v e their pocket for personal use with N26,250 as his salary engaged themselves in while living the workers at whenever the management p r o j e c t s t h a t a r e n o t the mercy of death. decides to pay. The petition added: "It profitable making, they

The Management of WRPC has introduced what is called slash of salaries and allowance to all back-up staff without due consultation from or with the back-up workers to give a consideration on their welfare

may interest you to know that the working condition is very poor, that we are forced to undertake a given task without the necessary Personal Protective Equipment (PPE). "We have worked for six years in this company without safety protective equipment and when we ask, we are either sacked or given a query letter for asking the right equipment for the job. "Sir, we also wish to inform you that some of us are from the host communities, we are faced with daily risk and hazards as a result of the operations of WRPC, and the management has in no time given consideration to our health or that of our children, even the ones unborn. "Some of our colleagues die on the job as a result of the poor operations system, yet no grants are given to their family members because they see us as third parties. "We want you, sir, to look into these issues with great concern and kind heart so that these salaries owed us are paid and improved.â&#x20AC;?

2015 June, SweetcrudeReports

Labour

Gas plant

PENGASSAN calls for emergency in Oil & Gas sector …Urges new Govt to convoke 'inclusive' forum to address issues KUNLE KALEJAYE

he Petroleum and Natural Gas Senior S t a f f Association of Nigeria, PENGASSAN, wants the new government of President Muhammadu Buhari to declare a state of emergency in the nation's oil and gas industry to address "debilitating problems" facing the sector, which, according to it, ''are too serious to be ignored". PENGASSAN maintained that the sector, the mainstay of the national economy, was currently confronted with various problems, which required close and due attention from the new government if its intention is to re-invigorate and reposition the ailing industry. These problems, according to PENGASSAN, include crude oil theft, intractable and persistent scarcity of petroleum products, poor state of local refineries, absence of local oil refining, subsidy payment controversies, pipeline vandalism, low level of crude oil exploration and continued

divestment by notable multinationals companies. Other issues confronting the sector and which required the attention of the government are illegal transfer or allocation of oil blocks, irregular Joint Venture, JV, funding with emphasis on delay in cash call payment, inadequate funding of government agencies in the

oil and gas sector and undue interference in the management of government agencies, the association said, adding that these were drawing not only the sector but the entire national economy back. PENGASSAN President, Comrade Francis Johnson, in a statement obtained by SweetcrudeReports,

maintained that besides the above listed issues, there were many other problems requiring the urgent attention of the new government. According to him, there was need for the new government to convoke an inclusive stakeholders’ forum of those involved in all operations in the sector to critically examine and

Halliburton: TUC says plan to sack workers aimed at killing unionism MKPOIKANA UDOMA

he Trade Union Congress, TUC, in Rivers State says the move by the management of Halliburton to lay off some members of its workforce was a ploy by the management to kill unionism in the company. To that end, it said it was in support of a recent directive by the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and the Nigerian Union of Petroleum and Natural Gas Workers, NUPENG, to its affiliates to

shut down operations of the company in Rivers state and Lagos over the laying-off move. TUC Chairman, Rivers State Chapter, Comrade Chika Onuegbu, in an i n t e r v i e w w i t h SweetCrudeReports in Port Harcourt, said the move by the management was unacceptable to labour. "What happened is that the management said they were doing redundancy and at the process of their redundancy they have taken the opportunity of the redundancy to lay-off virtually all the union officers in Halliburton."

"So what that means is that Halliburton will not have any unionism and that is why that directive was given and I want to state it clearly that TUC in Rivers State is fully in support of that action by NUPENG and PENGASSAN," he said. Onuegbu, who is a former National Industrial Officer of PENGASSAN, also e x p l a i n e d t h a t PENGASSAN and NUPENG decided to shut down operations of Halliburton after the management refused to settle their differences with the union amicably.

proffer workable and enduring solutions to all the problems in the larger interest of the Nigerian nation. Johnson said: “All the subsectors of the oil and gas industry have one challenge or the other and all these challenges are affecting the delivery of the benefits of our God-given hydrocarbon resources to the country and the entire people of Nigeria. "The union have tried to talk to the management to dissuade them and even appealed to them to say 'look you cannot take this kind of action because there is implication', but the management was rigid because they have already made up their mind, which made the union to reason that it is very clear that the reason Halliburton is taking this action is not because of any redundancy but clearly because the management wants to kill unionism in Halliburton and so they are just using redundancy as an excuse to execute their plan which is to see the end of unionism in Halliburton" he asserted.

2015 June, SweetcrudeReports

Labour

Appoint technocrats to run NNPC, Labour tells Buhari

NNPC Towers, Abuja

he nation's organised labour wants President Muhammadu Buhari to appoint only technocrats to the board and management of the Nigerian National Petroleum Corporation, NNPC Labour said the new

government should ensure that the corporation is headed by professionals and not politicians, adding that this is to ensure effective management and efficiency of the corporation and its 10 subsidiaries. This is the only way the system could move towards “achieving effectiveness and

Make the positions of the Group Managing Director of NNPC and the managing directors of the subsidiaries to be tenure-based and ensure security of tenure, not allowing appointments to be terminated at will by the president

Labour to new govt: Scrap SURE-P

he Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has called for the scrapping of the Subsidy Reinvestment Programme, SURE-P, for which N21 billion was provided for in the 2015 budget. PENGASSAN, in its recently released 'Road Map to Revamp the Oil and Gas Industry,' claimed that in the process of doing the job for which it was set up, SURE-P was at the whims of the party in power to settle those it wished to favour. According to the association,

this situation was the reason for the integrity issues dogging the Federal Government programme, which was introduced by ex-President Goodluck administration in 2012. The establishment of the programme followed from the partial removal of fuel subsidy by the Federal Government in January 2012. The development saw the government introduce a fiscal formula for the sharing of the national petroleum products subsidy savings. This formula required the Federal Government to warehouse 41 per cent of the

subsidy savings while the State and Local Governments share 54 per cent. The SURE-P was set up to oversee and ensure the effective and t i m e l y implementation of the projects to be funded with the savings accruing to t h e F e d e r a l Government from the subsidy removal.

curbing wastages of our resources and potentials to improve accountability and optimisation across the polity and economy,” Labour said. These form part of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN’s, recommendations on the oil and gas sector reforms for tne Buhari government. It also recommended that the NNPC and its subsidiaries should be restructured and given a clearer mandate free from political influences. PENGASSAN President, Francis Johnson, said that the sector needed to be revamped to prevent

wastage of the country’s resources and improve accountability and optimisation of the economy. Stressing that the appointments of NNPC leadership should be free from undue political interference and tenurebased, he added that the corporation’s revenue collection and expenditure should be transparent and in line with global best practices. He further recommended: “Reorganise the NNPC and its subsidiaries to function effectively with clearer mandate and empowerment. Thus, NNPC can operate and compete professionally in line with corporate governance principles and without undue political interference. “Instil in NNPC the culture of corporate governance and career management which requires a legislative review to ensure that the board of NNPC is headed by technocrats and not politicians. Ensure that the audit of NNPC and subsidiaries’ business and investment relationships, operations, financing, procurements are carried out and published at appropriate intervals. “Make the positions of the Group Managing Director of NNPC and the managing directors of the subsidiaries to be tenure-based and ensure security of tenure, not allowing appointments to be terminated at will by the president. Frequent changes in top management positions lead to policy somersault and create unstable system, which often breed compromise of corporate values and principles. Ensure that Group Executive Directors are permanent members of the board to facilitate effective decision making.” Johnson also urged the Buhari government to establish a Petroleum Inspectorate for effective regulation of the sector. On the Petroleum Industry Bill, PENGASSAN said: “There is need for an all-inclusive stakeholders’ summit to harmonise the grey areas and ensure speedy passage of the bill in a fair and equitable manner.”

Labour

2015 June, SweetcrudeReports

Chinese factory

6,000 Nigerians working in Chinese companies —NCBC

here are about 6,000 Nigerians working in various Chinese companies in the country, according to the Nigeria-China Business Council, NCBC. National Coordinator of NCBC, Chief Matthew Uwaekwe, revealed this in Abuja as he also disclosed that bilateral trade between Nigeria and the People's Republic of China has reached $23 billion. The volume of trade between the two countries was just $3.4 billion in 2009, with China heavily favoured. According to Uwaekwe, NCBC has been working to improve the trade ties between the countries with the result that the trade has seen a major improvement for Nigeria. While the trade was $2.7 billion in favour of China and $700 million for Nigeria in the not too distant past, the situation has now changed with China controlling $13 billion as against $10.5 billion for China. Stressing the progress

NCBC has made since inception, he said: “Before we set up in 2009, trade volumes between Nigerian and China was about $2.7 billion in favour China and $700 million in favour of Nigeria but we looked at it and decided to address this imbalance in trade relations between both

countries. “Today, we are talking about trade volumes between both countries growing to $13 billion for China and $10.5 billion for Nigeria. These trades on the part of Nigeria has seen us export to China such products like cocoa and

cotton wool”. He also said: “You will agree with me that in terms of the level of in-country employment this has generated, we have about 6,000 Nigerians working in various Chinese companies in the country”. Uwaekwe announced the

introduction of a campaign by the NCBC to ask Nigerian investors and their Chinese counterparts to seek incountry manufacture of products currently being imported from China instead of going to China to massproduce and ship such products to Nigeria. Maintaining that the body has also made significant progress in local manufacturing of electricity meters for Nigeria’s power sector, the Council coordinator stated that it has assurance from the Nigerian Electricity Regulatory Commission, NERC, to protect their effort with some protectionist regulations. He said: “The NERC gave us the assurance that they can only give people license to import if what they are importing cannot be found in Nigeria and that is another way of saying, we are not going to give you license to import if we have given license to people to manufacture this product in Nigeria. "If NERC will maintain this, it will encourage people to go into manufacturing of meter in-country, instead of importing just like Skyrun does at the Calabar Free Trade Zone.” Speaking on how to check substandard Chinese products in the country, Uwaekwe said: “We are now talking to partners to bring home their expertise and manufacture for us made-inNigeria products, fit for global consumption and also for our environment.” “With such efforts, we want to see them investing to in manufacturing of goods that fit our environment, services that of global standard and not what we see today”.

PENGASSAN calls for repositioning of PPMC KUNLE KALEJAYE

he Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has urged the Federal Government to reposition the Pipelines and Products Marketing Company, PPMC, to end the inefficiency in the distribution and supply of petroleum products. The union said that PPMC is not only crucial to the distribution of refined petroleum products but

also important to the performance of the country's major refineries as it supplies crude oil to them. PENGASSAN explained that aside crude supply to the refineries, PPMC has depots in Port Harcourt, Enugu, Calabar, Aba, Gombe, Yola, Ibadan, Ilorin, Makurdi and other major states’ capitals throughout the federation. PENGASSAN said unless government resolved some of the challenges confronting the operations of the company, it might be

difficult for petroleum products to be available in all parts of the country and at relatively the same prices. Some of the challenges affecting the effective and efficient operations of the P P M C l i s t e d b y PENGASSAN include insecurity of pipelines and staff of the company, inadequate funding, ageing equipment, supply of substandard operational equipment, shortage of manpower and irregular capacity building for existing staff of the company and lack of reliable fire trucks and

good safety standards. PENGASSAN, in statement obtained by SweetcrudeReports, noted that the greatest challenge confronting the PPMC is vandalism of pipelines by criminals and economic saboteurs. Explaining the implications of the challenge, PENGASSAN said, “The negative impacts of pipeline vandalism on the nation’s economy and the oil and gas industry are enormous.

Labour

2015 June, SweetcrudeReports

PENGASSAN backs deregulation …But says abrupt removal of subsidy will fuel chaos

Fuel loading gantry KUNLE KALEJAYE

he Petroleum and Natural Gas Senior Staff Association of N i g e r i a , PENGASSAN, is in support of deregulation of the downstream petroleum sector and the competitive market it will bring about. Bu, it has warmed the President Muhammadu Buhari government that an abrupt removal of fuel subsidy would lead to economic chaos, noting that deregulation policy should be based on increased local production of refined petroleum products rather than importation. The senior staff union argued that if local refining was not increased to meet local demand for petroleum products especially for Premium Motor Spirit, PMS, or petrol, removing subsidy

be to guarantee a total stoppage of both petroleum products importation and fuel subsidy," he said. He noted that Nigerians expect that relying on the resources that the nation is endowed with; the country should be able to provide refined products at reasonable and affordable prices to the populace, adding that this could have been possible if local refining capacities are enhanced. Comrade Ojugbana explained that both the government and industry operators had always yearned to promote competition and efficiency but failed to assure on how to enhance local refining capacity to contain local demand. “Government is thus persistently confronted with import parity pricing and the burden of subsidising the imported fuel instead of locally refined products. As an important stakeholder in the sector, we oppose the petroleum products importation regime, which is rent seeking and indeed a drain devise that is inimical to our economic and social empowerment. on the products would bring “It is affecting our selfmore hardship ‎ on Nigerians. dependence and means of In a ‎ statement signed by its job creation. Thus, we National Public Relations maintain our unwavering Officer, Comrade Emmanuel belief in local refining.” Ojugbana, the association said He stated that removing subsidy while the PENGASSAN strongly country depends on s u b s c r i b e s to the importation of refined retention of the statepetroleum products will make owned refineries in the their prices out of reach of best interest of the Nigerians thereby causing Nigerian nation and for inflation. economic security, adding Ojugbana said that that this is in keeping importation of refined petroleum products was a subsidy will create chaos will create other affordable with OPEC’s principle major drain on the nation’s t h a t m a y g r o u n d t h e and friendly sources for that member countries should hold good grip of revenue, adding that it economy. PENGASSAN energy needs,” he said. He therefore called on the the commanding height of created jobs for the refining calls for well-coordinated nations in spite of the high measures with timeline to government to declare a state their economy. “ P E N G A S S A N u n e m p l o y m e n t r a t e achieve self-sufficiency in o f e m e r g e n c y i n t h e local refining as a means of downstream oil and gas m a i n t a i n s s t r o n g confronting Nigeria. “Importation of refined proffering acceptable steps sector and convene an all- o b j e c t i o n t o t h e stakeholders forum to come privatisation of statepetroleum products is also to end fuel subsidy. “This should be combined u p w i t h c o n c r e t e a n d owned refineries as the putting the Naira under undue pressure and creating with such other measures sustainable steps with OPEC principle is being social problems for the for effective optimisation of r e l i a b l e t i m e l i n e f o r cautiously guided by economy. This is unacceptable gas especially for domestic, achieving demand-supply other OPEC member industrial, electricity and equilibrium through local countries,” he further to PENGASSAN. “Abrupt removal of fuel automotive energy. Such refining. "The strategy must stated.

Importation of refined petroleum products is also putting the Naira under undue pressure and creating social problems for the economy

Solid Mineral

2015 June, SweetcrudeReports

Miners

he Nigerian Mining and Geosciences Society, NMGS, says it would be ready to assist the new government of President Muhammadu Buhari actualise its vision of developing the solid minerals sector. Buhari, who was sworn-in as president last week, had in his inaugural listed exploitation of the nation's

NMGS pledges support to govt on solid minerals development abundant solid minerals resources as one of the major focus of his government. “The Nigerian Mining and Geosciences Society is ever ready as we have been doing over the years to assist the new government in actualising its

vision of developing the solid minerals sector. We have the expertise, experience and we are willing to sacrifice our time,” NMGS, president, Prof. Olugbenga Okunlola, said in Abuja.

Limestone deposits: 600 families to be relocated in Zimbabwe

ver 600 families i n C h i e f Charumbira's area in Masvingo, Zimbabwe are set to be displaced following the discovery of rich limestone deposits in the area. Their relocation is to pave way for a cement processing plant. About 16 villages will be affected while 200 villagers are expected to be initially employed at the plant, among other benefits to the locals. Masvingo Rural District Council Chief executive

officer Martin Mubviro said they had since signed a M e m o r a n d u m o f Understanding with a company that wanted to invest in the venture, Xhing Xhong Cement Company. "I can confirm that we've agreed with an investor who wants to establish a cement plant in Chief Charumbira's area. We have signed a M e m o r a n d u m o f Understanding (MoU) with the investor and it is now left to them to start the project. "Close to 600 families may be affected although the exact number of those to be moved

will be ascertained after feasibility studies are complete. The land where they should be resettled is yet to be identified," said Mubviro. H e s a i d m a j o r i n f r a s t r u c t u r a l improvements around Masvingo would be realised once operations begin. "While it may be true that some villagers will feel aggrieved to be moved from their original homes, there is a bigger picture of employment as many unemployed youths are going to get jobs," he added.

He said the society, with 6,000 strong membership, boosts enormous human resource that would be useful in the effective development and harnessing of the nation’s mineral resources. “As part of our professional responsibility therefore, we "The plant will also add value to the province's economy through infrastructural development. People in this province will also get their cement for building n e a r e r , s o t o o businesspeople who deal in building materials. Thus it'll have an effect on prices of cement." The establishment of the cement plant in Masvingo means that the government will have to look for more land for resettlement as TokweMukosi victims presently settled at Chingwizi in Mwenezi are scheduled to be moved again to about seven identified farms in Chiredzi and Mwenezi.

will continue to intervene by offering advice, suggestions and having robust engagement with all relevant stakeholders. This will lead to correct, sustainable, proven, policy formulations and implementation and all such activities that can lead to the overall development of these sectors for the benefit of the whole nation at large," Okunlola added. The NMGS is a non-profit professional organisation, with membership open to miners, geoscientists and metallurgists, Nigerians and non-Nigerians alike, who have practised, or are practising their professions within the country. It has as its vision and mission, to sensitise and create the much-needed awareness on the need to fully harness and develop the abundant mineral and energy resources in Nigeria in a sustainable manner for national development. The society was founded in 1961 as the Nigerian Mining Geological and Metallurgical Society, NMGMS, but was renamed NMGS i.

Freight

2015 June, SweetcrudeReports

Tompolo’s alleged Gunboat (Tompolo insert} OSCARLINE ONWUEMENYI

he pioneer chairman of the N i g e r i a n M a r i t i m e Administration and Safety Agency. NIMASA, Dr. Ahmed Tijani Ramalan, has disclosed that the agency pays the sum of N1.5 billion monthly to the ex-militant and leader of the Movement for the Emancipation of Niger Delta, MEND, Mr. Government Ekpemupolo, alias Tompolo, to protect the nation’s maritime areas. Dr. Ramalan, however, lamented that despite such gesture, the country still loses over 400,000 barrels of crude oil daily from its shores. The former NIMASA chairman, who revealed this in an interview, called on President Muhammadu Buhari to cancel the security contract awarded the exm i l i t a n t b y t h e administration of former President Goodluck Jonathan. He said, “Over 400,000 barrels of crude oil were being stolen daily from our shores under President Jonathan, yet we had a government that has the Navy, the Army and the Air Force, and the government of Jonathan decides to hand over the security of our

NIMASA pays Tompolo's firm N1.5bn monthly –Ex-chairman ...Says over 400,000 barrels of crude stolen daily from Nigeria maritime waters to Tompolo at a very exorbitant amount of money. “And these same people that are given the job of our maritime security are the ones that are collaborating with the international shipping companies to steal our oil.” The Goodluck Jonathan administration had in 2012 signed a $103 million deal with Global West Vessel Specialist Agency Ltd, a company linked to Tompolo. The deal was to patrol Nigeria’s waterways to stop piracy and oil theft. According to Ramalan, one

of the ways to help the country’s economy to bounce back is to revoke Tompolo’s contract. “And if Buhari does not do so, we will be the first to start attacking him. There is no basis to give that kind of billion naira job to exmilitants,” he declared. Making further clarification on how long the payment has been going on, Ramalan said it started “sometime after 2011 when Jonathan won his election and since then the payment has been on. “I was the pioneer

And these same people that are given the job of our maritime security are the ones that are collaborating with the international shipping companies to steal our oil

chairman of NIMASA, and NIMASA is the one funding the contract given to Tompolo. This is a guy that is collecting about N1.5 billion every month and yet our armed forces are not well funded. So, we call on the president to discard such contract,” he said. He further stated, “We supported President Buhari’s presidency because we believe that the country needs a strong leadership. The insecurity and economic problem that we are having in the country today is because of lack of a strong and quality leadership. “We believe the country needs a leader that is not corrupt, because the issue of corruption in the country has led the country to its knees. “The country would have gone down if the administration of Jonathan was allowed to continue. For us, we believe that having a new leader is what the country needs because of the massive corruption. We believe in President Buhari; we believe there is hope in

having him as the president.” He also expressed confidence in Buhari’s ability to solve the problem of insecurity in the country. Attempts by the paper to get clarification on the allegation from Mr. Government Ekpemupolo wasn’t successful. Initial calls made to his spokesperson, Comrade Paul Bebenimibo, went unanswered, likewise SMS but he later replied to an SMS sent to him, saying “I will get across to my boss.” He never did. Meanwhile, some ex Niger Delta militants have called on President Muhammadu Buhari to review the multimillion dollar oil pipeline security contract awarded to Tompolo and other exmilitants by the past administration. Coming under the aegis of the National Coalition of Niger Delta Ex-agitators led by its national president, Israel Akpodoro, they made the call at press conference in Abuja.

2015 June, SweetcrudeReports

Freight

Navy working hard to rid Nigeria of illegal activities —Jibrin …Arrests 30 ships for illegal bunkering MKPOIKANA UDOMA

he Nigerian N a v y i s w o r k i n g assiduously to r i d t h e country’s waters of illegal activities and has done very well over the past years, according to Chief of Naval Staff, CNS, Vice Admiral Usman Jibrin. “There is no doubt that the navy is working assiduously to continue to fight the pockets of illegal activities that still remain in our maritime environment," said Jibrin as he revealed that the Navy has in the last one year achieved a drastic reduction in crude oil theft and illegal activities in the Nigerian water He spoke in Abuja as the Eastern Naval Command, ENC, of the Navy said it has confiscated 30 ships, tugboats and badges in the last six months following the activities of illegal oil bunkering on the waterways in the states under its authority. The Flag Officer Commanding the ENC, Rear Admiral Henry Babalola disclosed this in Calabar at the end of the recent biannual three-day sea exercise. Rear Admiral Babalola said that apart from confiscation, his men now take further steps to apprehend those masterminding the crime. According to him: “In the last six months, we have arrested over 30 ships, tugboats and badges. Almost on a daily basis, my operations men in Port Harcourt, Ikot-Abasi, Calabar, Bonny and Ibaka go on aggressive patrols and we have destroyed numerous illegal refineries." “We have seized equipment and destroyed several formations, and it is a continuous exercise. When we arrest a ship, our focus is not on the crew because the crew members are doing their paid jobs. "We go further to look for those behind it and our job is to effect arrest, carry out preliminary investigations and hand them over to the

Nigerian Navy personnel relevant security agencies and then we will go further to be witness during trials.” The naval boss lamented that one of the major challenges facing the Navy was the use of the creeks as hideout for criminals, but assured that the problem

would be sorted out. He further disclosed that the three-day exercise was aimed at protecting the multi-million dollar offshore investments in the high sea. “The major security challenge facing us on the sea now is the problem of

kidnapping and hostagetaking. I am happy to inform you that the Chief of the Naval Staff, Vice Admiral Usman Jibrin, has allocated some new patrol boats to combat these activities head on. “We are also expecting

Australia, Norway to partner NIMASA on capacity development

ustralia and Norway have revealed their d e sire t o p ro v i d e t he Nigerian Maritime Administration and Safety Agency, NIMASA, with technical and human capacity development support. T h e c o u n t r i e s ' representatives in Nigeria made this known on separate visits to NIMASA headquarters in Lagos, where they were received by Dr. Ziakede Patrick Akpobolokemi, director general of the agency. The Australian Deputy High Commissioner to

Nigeria, Angela Tierney, on her visit, commended NIMASA's human capacity building drive and conveyed the willingness of her country to work with NIMASA in building the requisite capacity for the industry. Earlier, the Norwegian Ambassador to Nigeria, Mr. Rolf Ree, had during his visit, also stated his country’s readiness for the provision of technical support to NIMASA towards realising the full potentials of the Nigerian maritime industry. Receiving the envoys, Akpobolokemi said the

Agency would appreciate partnership with major maritime nations such as Australia and Norway particularly in the area of capacity building. “Australia is a nation that enjoys high respect among the comity of maritime nations, and partnership with your country will surely help us realise the potentials of building a competent workforce that is poised to take the Nigerian maritime sector to greater heights,” Akpobolokemi told the Australian deputy high commissioner. While meeting with the Norwegian ambassador, the

other patrol boats that are currently undergoing construction in Port Harcourt. When we have those boats on our waterways, there will be a very significant reduction in criminal activities,” he said.

director general noted with delight “the support so far given the Agency by your country has been of immense benefit to the maritime sector locally”. He urged them not to relent in their support, as such will continue to help grow Nigeria as a maritime nation. He assured the envoys of an improvement in monitoring Nigeria’s maritime domain in real time using satellite surveillance system that covers the whole of Nigeria’s coast and the Gulf of Guinea. This progress, he said, should attract more commercial activity from around the world.

2015 June, SweetcrudeReports

Freight

Seafarers

SAM IKEOTUONYE

he Nigeria Ma r i t i m e University, NMU, plans to generate over six billion dollars as revenue from training and supply of seafarers to international maritime industry, according to Dr. Ziakede Akpobolokemi, the DirectorGeneral, Nigerian Maritime Administration and Safety Agency, NIMASA. The NIMASA boss, who revealed this while fielding questions from State House correspondents in Abuja, said the university, which obtained its licence from the Federal Government last

SEAFARERS: Nigeria can do better than Philippines, says Akpobolokemi Wednesday, was an initiative of NIMASA. According to him, the institution plans to train qualified manpower that will guarantee sustainable training for staff of maritime industry at international standard. Akpobolokemi said “youths moving aimlessly on the streets should come and study.

“After graduation, we will give them necessary sea times experience and the rest of them and expose them anywhere in the world and let them send remittances to government. “The Philippines earns more than six billion dollars annually from selling seafarers and remittances that come from selling

seafarers across the world and we have the population that is useful in characteristics. “We can do far better than the Philippines.’’ He, therefore, said that the formal approval of the licence for the university would signify a major milestone in NIMASA’s capacity building initiatives because it would

Indorama's $130m port terminal to handle 35,000dwt vessels SAM IKEOTUONYE

a n a g i n g Director and C h i e f Executive Officer of Indorama Nigeria, Mr. Manish Mundra, says the $130 million port terminal complex being built by his company in conjunction with OIS at Onne Port in Rivers State would handle vessels within the range of 5,000 to 35,000

deadweight, dwt. “The port terminal comprises marine facility of 320 metres quay to handle vessels ranging from 5000 dwt (deadweight) to 35000 dwt and 6.20 hectares of land terminal facility catering of handling and storage of dry bulk urea, break-bulk cargo and containerised cargo,” Mundra revealed. He also said the port complex, which is 72 percent completed as at March this year, would be exporting dry bulk Urea fertiliser from

Indorama’s fertiliser plant also under construction at t h e I n d o r a m a petrochemicals complex in Eleme, near Port Harcourt, Rivers State, adding that it would also serve for import and export of various types of break-bulk and containerised cargo for the partnering company Messrs OIS. Describing the project as a major foreign direct investment in the maritime

sector and a boost to the national economy, he said the world-class port complex would meet international best standards as it is designed by international engineering companies and contracted to local construction companies in partnership with expatriate engineers and other technical experts.

guarantee sustainable training of qualified manpower for the maritime industry at international standard. He added that “following the licence issued by the Federal Government, the university is now set to commence academic activities at its fully developed temporary site in Kurutie in Warri-South West Local Government Area of Delta. Akpobolokemi said no fewer than 32,600 students had so far benefitted from NIMASA’s Scholarship scheme in the last four years. He noted that NIMASA’s management remained committed and focused in building human capacity for the Nigerian maritime sector through a stronger Nigerian Seafarers Development Programme, NSDP. He said the programme was designed to train young Nigerians in various maritime professions at degree level.

2015 June, SweetcrudeReports

Motoring

2015 June, SweetcrudeReports

2016 Ford Explorer: First Drive with total interior volume actually dropping from 151.7 cubic feet before to 150.3 cu.-ft. now. While much of the interior has been changed in detail, most of it is familiar. Ford is proud that the center console armrest is now calibrated to the same height as the armrests on the doors, but the big improvement is on the dash where real dials and switches replace the touch-sensitive membrane buttons that were part of the previous design. People like real things that click and spin and calibrate intuitively and Ford has delivered. What is it: 2016 Ford Explorer six- or seven passenger SUV Competitors: Toyota Highlander, Chevrolet Traverse, Nissan Pathfinder, Honda Pilot Alternatives: Honda Odyssey, Acura MDX, Monasticism Pros: Better in many details with a strong engine line up, this is a thoughtful update of what is already the best seller in its class. Two of the available engines are great and third one isn't bad. Cons: Still not the roomiest vehicle in its segment. There are only six forward gears in its transmission. Eddie Bauer is MIA. Would I buy it with my own money? On a budget I might go with a Kia Sorento. If I were extravagant, I'd like an Acura MDX. But the Explorer sits nicely between them with the new 2.3liter EcoBoost four a sweet alternative to V-6 orthodoxy. So, sure.

ord has updated t h e Explorer for 2016 keeping one idea in mind: Don't screw it up. Change a few things on the margins, do what's necessary to goose fuel economy, make some minor engineering twists, get rid of what customers haven't liked, throw in a new trim level at the top, but

don't screw it up. Don't. Screw. It. Up. This thing has sold well since its reincarnation as a carbased crossover and is making money. In fact it's been selling a little better in each subsequent year of its five-year (so far) life. Now is not the time to take risks. There's nothing necessarily wrong with risk-adverse updates, but there's rarely

anything much to get excited about. And while some new elements of the revivified Explorer are impressive the newly available 2.3-liter turbocharged EcoBoost four at 280 horsepower is super sweet others are trivial. Maybe the best things about the updated 2016 Explorer is that it could induce some dealers to bargain more aggressively on their 2015 models. From the base of the windshield forward, all the body panels are new and reshaped. The changes are subtle less mass in the hood,

slimmer headlights with LED elements, driving lights integrated into the bumper cover and a grille that's more Ford truck and less Remington Flex Twin Foil shaver but the 2016 Explorer is recognizable as the same vehicle it's been since 2011 from every angle. The wheelbase has somehow stretched a massive 2/10ths of an inch longer than in the 2015 model, while the front and rear track widths stay at 67 inches. There's still seating for six or seven people in three rows,

The $31,595 base model gets by with an unboosted 3.5-liter V-6 rated at 290 hp and 255 lb.-ft. of peak torque at 4,000 rpm. While front wheel drive is standard, all-wheel drive is offered even on that base machine. The only transmission offered in any Explorer is a sixspeed automatic transaxle. In a world where Jeep Cherokees have nine forward gears and Nissan Pathfinders used continuously variable transmissions, a six-speed automatic seems almost quaint. The most popular trim lives one step up on the XLT; the standard upholstery is a cloth rugged enough to withstand bulldog attacks while the steering wheel and shift knob are wrapped in leather. Push button start and a rear parking sensor system are part of the $34,295 XLT deal. The $42,195 Limited was the top of the line up until this year, and it CONTINUES ON PAGE 41

2015 June, SweetcrudeReports

Motoring

2016 Ford Explorer: First Drive CONTINUED FROM PAGE 40

slots in now as a truly luxurious crossover that manages to look restrained in light of the new indulgences. A particular ridiculous part of the Limited is the "multi-piece satin chrome with rosewood film accent trim appliquĂŠs." I'm not certain, but I'm pretty sure that no satin was spun, no chromium was mined and no rosewood trees felled to produce those appliquĂŠs. For those who want to pretend their Explorer is really a soft-serve sex machine, there's a Sport trim model available at $44,195 to start. Running the EcoBoost V-6, a more tightly tuned suspension, quicker steering and more aggressive 255/50R20 tires on aluminum wheels, the Sport does actually move with a bit more spirit than the others. And at the top of the range lies the new Platinum model, which is so indulgent that the tires themselves may as well be covered in soft cowhide. While Ford officials had a Platinum on display in all its tufted and quilted leather glory, they wouldn't let me (or anyone) drive it. The Platinum again, no actual platinum content will go on sale sometime after the rest of the 2016 Explorers hit Ford showrooms in June. My guess is that it will be the perfect SUV for those people who really want a Range Rover but don't want the rub-therubes-noses-in-it snobbery that comes with it. And its $53,495 price tag, while not quite at Range Rover altitude, is a lot for a Ford. (Instead of "Platinum" couldn't it have been "Eddie Bauer?")

On all models except the Sport, Ford has slowed the steering ratio; throw in the inherent gooiness of electric power assist and the result is a sort of numbness in the steering that is oddly reassuring. It's as if the steering was designed to bother the driver with only just enough information to keep the Explorer pointed between the lines painted on the road. The Sport keeps the old steering ratio and, when combined with its stiffer springs and larger wheels and tires, never feels as well settled as its less aggressive brothers. Nervous isn't the right word for it, but anxious comes close. In compensation, the Sport, which has standard allwheel drive, has better initial turn in entering a corner and a bit less body roll. Ride quality doesn't seem to suffer much. What's most impressive about the Sport is the EcoBoost V-6 that is a ferocious and wellmannered beast. The two turbos heaving into its six pots boil up a thick 350 lb.-ft. of torque at 3,500 rpm and it locomotives through the transmission's gears. That grunt requires premium fuel for optimal performance, and it will drink it at an EPA-rated 16 mpg in the city and 22

mpg on the highway clip. Run at part throttle, the easygoing nature of this engine is confidence inspiring. The standard V-6 peaks at just 255 lb.-ft. of torque at 4,000 rpm. It needs more spur than the EcoBoost V6, but brings with it slightly better 17 mpg in the city and 23 mpg on the highway fuel economy ratings (with AWD). Most buyers will take the naturally aspirated V-6 and never feel dissatisfied, or inspired.

The optional 2.3-liter EcoBoost four is similar to the EcoBoost four offered in the Mustang and it feels more at home in Explorer than it does in that coupe. With 310 lb.-ft. of torque on tap at just 3,000 rpm, the character of this four may align better than the other two with the Explorer's essential personality. It's smooth, it's capable and it carries the best fuel economy numbers of the bunch 18 mpg city and 26 mpg highway with

all-wheel drive. Stick with frontdrive and that highway number rises to 28 mpg. And unlike the languid 2.0-liter turbo four it replaces, this EcoBoost can be paired with allwheel drive and is rated to tow 3,000 pounds. The downside is that EcoBoost four costs $995 more than the standard V-6. The better fuel economy isn't likely to make up that cost difference, but it is likely a better engine than the standard V6 long-term. If you care about drag racing your new Explorer, opt for the EcoBoost V-6, which is likely to make it from 0 to 60 mph in under six seconds. The regular V-6 and EcoBoost four will do that same trick in a bit more than seven seconds. The Explorer has been the country's best selling threerow SUV for a while now and that's likely to continue with this updated vehicle. But the competitive environment is changing. Honda's new Pilot will attract attention, the redesigned Toyota Highlander and Acura RDX are still fresh to the market, and the crossoveri ze d Ni ssa n Pathfinder has reinvigorated that brand. And for all Ford's efforts in this redesign, it hasn't addressed the fact that the Explorer is a bit smaller inside than some of its competitors. There are no sure things. Even when your only goal is to not screw it up.

Technology

2015 June, SweetcrudeReports

Reviewing rig construction cost factors Labour, material prices, shipyard location play key role BY MARK J. KAISER & BRIAN F. SNYDER Center for Energy Studies, Louisiana State University

any factors influence rig construction cost. Market

conditions, design type and class, construction shipyard,

and rig specifications are the primary factors. Contract

type, shipyard productivity, and scale economies also

influence cost, but are either unobservable or more

difficult to ascertain the nature of their impact. The goal here is to describe the primary factors that impact rig construction costs.

Market conditions Prices are determined by the demand for rig construction services and the number of shipyards capable of supplying these services. Drilling contractors demand newbuild rigs when day rates and utilization rates make investment criteria positive. But only a small number of shipyards around the world are capable of building rigs; and during periods of high demand, the supply of rig construction services saturates the market, leading to backlogs and price increases. From 2000 to 2011, for both jackups and floaters, there was little activity early in the decade and prices were low. The number of jackups ordered during this time numbered less than 10 per year. For floaters, there were three orders in 2001 and two orders in 2002. As orders increased in the middle part of the decade, prices rose. Following the 2008 recession, orders declined markedly, but prices only declined marginally, reflecting long backlogs and the expectation that a decline in orders would be short lived. Material prices Building a rig requires steel, labor, drilling, and other equipment. The manner in which cost is distributed across these categories determines the variation in construction cost by rig class, complexity, and time. Shipyard location plays a key role. In China, labor costs are low and are likely to represent a small proportion (on the order of 10%) of total cost. By contrast, US labor costs are high and may account for as much as 30% of total costs. Steel costs are highly variable over time, and when prices are high, the percentage values will tend to reside at the upper end of their ranges.

reasonable proxy for the rig construction market. Both rig prices and the steel index grew over the course of the decade at approximately the same rate, and are correlated. The steel price index explains 70% of the variation in average jackup rig prices. No significant relationship is observed between floater prices and steel prices.

Equipment prices Engines, cranes, generators, drilling equipment, and dynamic positioning systems are significant components of rig cost. These are all third-party materials purchased by the rig builder and assembled onsite or at another location. The drilling equipment package is the largest equipment expenditure, and typically costs $20 to $70 million for jackups and $100 to $200 million for floaters (or on the order of 10 to 30% of total costs). Non-drilling related equipment range over similar cost intervals; and together, drilling and other equipment typically range from 30 to 60% for jackups and floaters. Drilling and equipment costs are influenced by steel prices to the extent that the majority of the equipment is made from steel, but more importantly, are influenced by demand from the oil and gas and commercial shipping industries. Labor cost is also a high component in equipment manufacturing costs. The oil and gas field machinery equipment index can be used to proxy the costs of the drilling equipment installed on MODUs; the finished goods index proxies the overall rate of inflation experienced by manufacturers. While both indices are based on US products, the oil equipment index is applicable to global MODU prices because much of the drilling equipment installed on MODUs is sourced from the US. Throughout the 1990s, the oil and gas index grew gradually and in line with the finished goods index, but in the mid-2000s the oil and gas index increased rapidly, outpacing the overall rate of inflation, suggesting that the increase in rig prices is due in part to an increase in the costs of drilling equipment. The steel price index was a poor predictor of floater costs while the equipment index explained 82% of the variation in prices, suggesting that equipment costs are a larger factor in overall prices than steel costs for floaters. The equipment and steel indices are themselves strongly correlated, and are likely to be influenced by many of the same global factors. However, their influence on rig cost is largely independent, since each index impacts a separate shipyard budget category. Exchange rates Contracts for rig construction are denominated in US dollars, but costs at international shipyards may be in US dollars, euros, Chinese yuan, South Korean won, or Singaporean dollars. For example, labor and steel costs at a South Korean shipyard may be in South Korean won while drilling equipment costs may be in US dollars. For the rig builder, as the value of the US dollar rises, the value of a contract increases. From the perspective of a rig buyer, a strong US dollar lowers newbuild costs at international shipyards. Thus, when the dollar declines relative to a local currency, an increase in costs is expected.

Labor

Steel is the main component of rigs, and material prices impact newbuild costs. On a proportional basis, jackup steel is usually a larger component of cost (10 to 20%) than in floaters (<10%). Steel prices are specified on a per ton basis and vary regionally with steel quality and shapes. Rigs are constructed using a variety of steel strengths, and no single steel price reflects costs for all rigs. However, the vast majority of rigs are built in Asia, and the Asian steel price index is a

Labor costs and productivity are important drivers of shipyard costs. The costs of shipbuilding labor in the US and Korea are roughly similar, and about three times the labor costs of Singaporean yards. South Korea compensates for relatively high labor costs with advantages in productivity over Singaporean and US yards. Over the past decade, both labor costs and productivity have increased in Singaporean and South Korean yards; the combination of these two factors CONTINUES ON PAGE 43

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will determine the contribution of labor to total costs. In the US, each dollar spent on labor generates approximately three dollars of revenue, consistent with labor costs accounting for approximately one third of total costs. In Singapore and South Korea, each dollar spent on labor generates approximately seven to ten dollars of revenue, suggesting labor costs make up on the order of 10 to 15% of total costs for rigs built internationally.

and operating and capital costs. Stena and Keppel have developed a drillship to drill slimmer, less expensive wells, but to date, these smaller designs have not been as popular as the larger designs.

Rig specifications Rig designs vary in drilling capabilities, VDL capacity, maximum water depths, and environmental criteria. As vessel specifications increase, costs rise for all other factors held constant. Some of the key criteria are outlined below.

Design class Newbuild jackup designs range from $159 to $530 million for water depths between 200 to 492 ft and variable deck load (VDL) capability of 3,750 to 7,000 tons. The KFELS B Class, Letourneau 116E, and F&G JU-2000E are the most common designs. In general, there is relatively little variation in cost between rigs of the same design, but some designs exhibit more variation in water depth capacity and price than others. The Letourneau Super 116E class is especially

Number and cost of worldwide floater orders, 2000-2011. Source: Data from RigLogix, 2011

Structural weight. Weight is associated with rig capabilities. Larger rigs have greater variable loads, can support more powerful drilling equipment, and can operate in more severe conditions. Weight is an important factor in design and is linked to fabrication costs; as more steel is added, material costs and fabrication expenses increase. However, complex tradeoffs are involved with weight management, and because so many interdependent factors are involved, it is difficult to quantify the effects of weight on cost.

Number and cost of worldwide jackup orders, 2000-2011. Source: Data from RigLogix, 2011

Water depth. variable, because several rigs are being built for the Persian Gulf market where water depth capability is not at a premium. Semisubmersible newbuilds range from $460 to $771 million for water depth capacity ranging from 1,640 to 10,000 ft and VDLs between 5,000 and 22,000 tons. Operating displacement varies between 42,000 and 62,000 tons. There is more variation in costs between rigs of the same design than for jackups, and this may reflect increased customization. Most of the units are sixth generation ultradeepwater rigs; however, the GM 4000 is designed for drilling in mid-water regions or well workovers in ultra-deepwater, while the GVA 4000 NCS is intended for harsh environment drilling in mid-water. Both of these rigs were designed to provide lower capital and operating costs in regions in which the capabilities of ultra-deepwater rigs were not required. Drillship newbuilds range from $550 million to $1.2 billion for VDLs ranging from 15,000 and 24,000 tons and displacements between 45,000 to 112,000 tons, in part reflecting differences in oil storage capabilities. The Samsung 10000 and 12000 and the Gusto P10000 are the most common designs and can store small amounts of oil (approximately 140,000 bbl) during early production, while the Gusto PRD12000 and Huisman designs exclude oil storage to reduce ship size,

For jackups, water depth is a primary determinant sof cot. The legs of a jackup are made of expensive high-grade steel, and as water depth capacity and environmental criteria increase, so do the costs of construction. Wind and wave forces act in proportion to leg length, and above a certain threshold, a rig cannot be extended to deeper water by simply extending its legs. Instead, a new and larger rig design is required.

For drillships and semisubmersibles, water depth capability is not as strongly correlated with costs, because the rigs are floating units; and with the exception of the drilling risers and anchor handling systems, do not have elements that pass through the water column. Increased water depth is associated with increased costs for risers, riser tensioners, mud pumps, anchor winches, drill strings, and mud storage facilities.

Operating environment. Rigs capable of operating in harsh environments are heavier and more expensive than moderate environment rigs. Harsh environment jackups have longer legs to increase the airgap, and as leg length CONTINUES ON PAGE 44

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reputation and degree of integration. Many of the major rig shipyards maintain their specialization with proprietary designs. Keppel-FELS and LeTourneau each have their own line of jackup rigs, and while these yards can and do build other designs, they have gained significant experience by building specific rigs and may be able to do so at lower costs than other yards. Similarly, many yards have long-term contractual relationships with rig operators; these operators often prefer a particular design class or company and they may order several identically designed rigs to be delivered from the same yard which will likely lead to cost reductions through learning.

Asian steel index and average world jackup prices and correlation, 2000-2010. Source: Data from RigLogix, 2011; Steel Business Briefing 2011

increases, the distance between the legs and the size of the hull must also increase. Similarly, semisubmersibles built for harsh environments must have longer and thicker columns than moderate environment units, which in turn increases costs. Drillships are not typically designed for harsh environments, but interest in Arctic exploration has led to harsh environment designs, and can cost over $1 billion to build, several hundred million more than moderate environment designs.

Equipment specifications. As the drilling depth capability of a rig increases, more robust pumping units and safety systems are required to handle the higher formation pressures and temperatures, increasing costs. The power, storage and VDL capacities determine the maximum drilling equipment that may be installed on the rig. Drilling depth may be used to proxy equipment specification, but it is the actual specifications that determine rig cost. Important specifications include the hook load, riser pressure, rated pressure and diameter of the blow-out preventer, degree of offline capability, storage capabilities, number and power of mud pumps, mud tank capacity, number and flowrate of shale shakers, desilters, desanders, cementing unit operating pressure, and capacity of the BOP handling system.

Contract type and options Rigs may be built by drilling contractors with or without a firm contract commitment from an E&P company. When building a rig speculatively, drilling contractors may approach negotiation more aggressively and be less willing to pay than when building a rig with a contract commitment. Building a rig on speculation increases risk and the firm may only be willing to accept this risk when market conditions (e.g. recession) put downward pressure on costs, making the investment more likely to be profitable over the life of the rig. For example, in 2011, Maersk Drilling ordered two MSC CJ70 jackups on speculation for $500 million each; two months later, Seadrill ordered the same rig for $530 million after receiving an initial contract. Similarly, in June 2008, Seadrill ordered a Pacific Class 375 rig on speculation from PPL shipyard for $215 million; the next month Egyptian Drilling received a contract and ordered the same rig from the same shipyard for $220 million. These data are anecdotal and the differences small, but the general synopsis is clear. Rigs ordered on option allow a contractor to purchase one or more additional rigs at a fixed price simultaneously with their initial order. Typically, options must be exercised within a year of contract signing, and the cost of optioned rigs is frequently higher to account for the risk of inflation, and because the option has inherent value for the contractor by locking in future newbuilding capacity. Shipyard characteristics Shipyards vary in their rig building experience, labor costs, supply chain management, tax structure and government subsidies, construction methods,

Annual compensation in the U.S., Korea, and Singaporean shipyards. Source: Bureau of Labor Statistics; Wong and Chang 2011.

Large rig shipyards exist in Singapore, China, India, South Korea, Russia, the United States, and the United Arab Emirates. These countries differ markedly in their labor practices and costs, tax structures, the importance of rig/shipbuilding to the overall economy, and the degree of government intervention, all of which influences construction cost differences across countries. Competition works in the opposite direction, however, and forces high-cost shipyards to offer similar prices and accept lower returns to win work, reducing price differences. Shipyards differ in the methods in which they construct rigs based on their level of automation, subcontracting, and the degree of serial production line usage. The particular method of fabrication and assembly is unique for each yard and rig, and depends upon space and equipment availability. Singaporean shipyards are particularly space limited. South Korean yards are less space limited and use a sophisticated "mega-block" method of ship construction in which very large ship sections are fabricated separately and then assembled in a floating dock. A high degree of specialization will likely lead to reduced costs and enhanced quality control standards, but this is only feasible for yards with a constant supply of orders.

Backlogs The amount of time between when the rig is ordered and delivered is important in determining costs and risks to both parties. The time to construct a rig depends on a number of factors but is typically 18 to 36 months; however, the time between contract finalization and rig delivery can significantly exceed the construction time due to shipyard backlogs. During construction, the buyer is required to make payments on the rig but does not receive income which can create cash flow problems for buyers. Additionally, as the time between ordering and delivery increases, market conditions may change, creating risk for the buyer and seller. For the buyer, rig utilization and day rates may decline while for the seller, steel, labor or material costs may increase. When there is a particularly long delay between contract finalization and the start of construction, a cost escalation clause may be included.

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Militants OSCARLINE ONWUEMENYI

he Ijaw Youth Council, IYC, has expressed mixed feelings and concerns over the inaugural address of President Muhammadu Buhari in relation to the Niger Delta region. A statement issued by the spokesman of IYC, Mr. Eric Omare, and made available to SweetcrudeReports on Sunday, noted that there was need to review the terminal date of the Amnesty Programme to accommodate those who are yet to complete the scheme. "President Muhammadu Buhari in his speech said that the amnesty programme for ex-Niger Delta agitators would end by December 2015. The IYC appreciates the fact that the amnesty programme cannot continue forever and therefore must have a terminal date. "However, the questions on the lips of beneficiaries and

MILITANCY: Ijaw youths call for extension of Amnesty Programme The people of the Niger Delta must be the ones to decide the shape of developmental institutions in the region stakeholders in the Niger Delta region are: what would happen to those that have not been trained at as December 2015? And what about those still undergoing training or have not completed their training?” Mr. Omare said that the termination of the programme would throw up challenges for beneficiaries of the

programme who were still undergoing training and were at different levels of training. The IYC spokesman said the group expected the Federal Government to allay fears of beneficiaries who were in different parts of the world and were worried that their trainings might be affected if the programme was

terminated in December 2015. He added that the case of substantial number of exagitators who had not been trained was even more worrisome. He, therefore, appealed to the Federal Government to address these challenges before the programme was terminated. On streamlining projects and programmes in the Niger Delta region to make them more effective, IYC said it would support any step of the Federal Government to strengthen institutions responsible for the development of the Niger Delta region. The group applauded the planned streamlining of policies to rapidly develop the region. “We, however, wish to advise that any effort toward restructuring

developmental institutions and projects should have the input of the people of the region at the heart of the process. “The people of the Niger Delta must be the ones to decide the shape of developmental institutions in the region,’’ the statement read. The IYC said it had expected President Buhari to address issues such as cleaning up of the Niger Delta environment and implementation of the UNEP report on Ogoni. He added that also left out of the inaugural address was the menace of oil theft which had greatly contributed to environmental degradation in the Niger Delta region, which Mr. Buhari promised to tackle during the presidential campaigns.

2015 June, SweetcrudeReports

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Shell, NNPC celebrate 17 years of education & football in Nigeria OSCARLINE ONWUEMENYI

he NNPC/Shell Cup football competition for secondary schools reached its seventeenth year this 2015. This milestone year ended with Rochas Okorocha Foundation College, Ogboko, Imo State, emerging winners of the 2015 cup, after defeating Government Day Secondary School, Gwale Kano by 2-1 inside the main bowl of the Teslim Balogun Stadium, Surulere, Lagos. The football competition which was initiated in 1998 by the Shell Petroleum Development Company, SPDC. and its joint venture partners, focuses on reducing the number of boys who abandon their education in pursuit of a football career. Speaking at the game, the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr. Joseph Dawha, noted that the championship "seeks to promote education and sports in Nigerian secondary schools. A sound person must be fit in body and mind, and over the years participation in this competition has shown that our students can attain academic excellence while pursuing their passion for sports." He added that since the inception of the NNPC/Shell Cup in 1998, more than 700,000 youths have participated in the championship. "We are proud to note that some of the footballers that started here have gone ahead to play for the national team and international club sides," he added. “Combining sports with education is the main objective of the NNPC/Shell Cup. I am happy to say that this has been achieved by the sustained efforts of SPDC, our joint venture partners and the Nigeria Schools Sports Federation” said the SPDC General Manager, Gas, Ubaka Emelumadu, who represented the SPDC Managing Director/Country Chair, Shell Companies in Nigeria, Osagie Okunbor, at the 2015 Finals. Rabiu Abdul of the Ministry of Education, Kano, has

attended NNPC Shell Cup finals for 17 years. Speaking on his motivation for attending the competitions, the former games master who has coached several primary and secondary schools in Kano since the 80’s said, “I attend the finals of the competition, even when the schools I coordinate do not qualify. I always like the progress of youths, and I appreciate the effort that Shell and NNPC are putting into youth development through sports. He added that, "The

competition has achieved great success in motivating youths to take their education seriously while chasing a football career. In Kano, students are motivated to come to school, simply because they know it’s a criterion to participate in the NNPC/Shell Cup” This year, Gido Vader, Melvin Boel and former Super Eagle’s Mike Obiku from the renowned Feyenoord Academy were on ground to provide coaching clinics for semi-finalists. The

partnership with Feyenoord Academy which began in 2014 is one of the ways the SPDC JV is improving the experience of students. “Feyenoord Academy is one the most successful youth academies in the world and SPDC and its joint venture partners are pleased to be working with it to bring world-class coaching and player development expertise to Nigeria,” said Igo Weli, General Manager Sustainable Development and Community Relations,

SPDC, during a media chat. He explained that in the past 17 years, the competition has helped discover untapped potential, nurturing them into talented players, while keeping them in school. Champions like Super Eagles star Ejike Uzoenyi, and Under-17 World Cup winner, Akinjide Idowu are a few examples of national and international players who emerged from the competition.

Winners of NNPC/Shell cup receiving their medals

Groups urge Buhari to address environmental degradation in N'Delta OSCARLINE ONWUEMENYI

iger Delta youth groups under the umbrella of the Ijaw Youth Council, IYC, have urged President Gen. Muhammadu Buhari to address environmental degradation in the Niger Delta as well as sustain the existing peace in the region in order to increase oil production and prevent a return by the youth to the creeks. “The new administration

should address the problems of environmental degradation in the NigerDelta region, including implementation of the UNEP report on Ogoni. “It should also address the general environmental remediation in other parts of the region which are affected by environmental degradation,” President of the Council, Mr Udengs Eradiri, said at a news conference in Abuja. Eradiri also said the existing peace in the region could be maintained if the incoming

administration sustained the Presidential Amnesty Programme for ex-militants. Reading from a resolution reached by various youths groups in the Niger Delta Region under the umbrella of IYC on April 5 in Tuomo community in Delta State, Eradiri said, “The Presidential Amnesty Programme for ex-agitators in the Niger-Delta region, which has greatly contributed to the sustenance of peace in the Niger-Delta region, should be sustained by the incoming

administration. “President Goodluck Jonathan’s extra-ordinary peace building efforts in the Niger-Delta region is responsible for the resultant increase in oil production and increased oil revenue,” Eradiri said. Eradiri also urged Buhari to fund and strengthen the existing federal structures set up to develop the NigerDelta region such as the Niger-Delta Development Commission, NDDC, and Niger-Delta Ministry. H e s a i d t h e recommendations of the National Conference should be implemented by the incoming government in order to deepen the federal system of government where the federating units will develop at their own pace.

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E-mail: johniyene@yahoo.com

CAPITAL FLIGHT:

The receding fortunes of the Niger Delta

Weapons surrendered by ex-militants

Researchers want Amnesty Programme reviewed ...Say it hasn't brought development to N'Delta MKPOIKANA UDOMA

esearchers at the University of Port Harcourt have called on t h e n e w government of President Muhammadu Buhari to review the Presidential Amnesty Programme in the Niger Delta. They made the call in a communique issued at a workshop for the presentation of the research work organised by Nigeria's Stability and Reconciliation Programme in collaboration with the university's Faculty of Social Sciences. The communique which was presented by the former head of the Niger Delta Stakeholders' Desk of the Presidential Amnesty Programme, Mr. Patterson Ogon, called for a holistic and sustainable inclusive programme. According to him, "There is need for industrialisation of the region through the establishment of cottages, industrial parks and small scale industries. Awareness creation to address the issue of stigmatisation of exmilitants, proper quality assessment of the aims, successes and challenges of the amnesty programme. "Provision of modular refineries in the region will reduce the issue of unemployment, boast local economy and make refined petroleum products available for local consumption.

"The need for joint conflict resolution and management forum among all development partners and stakeholders such as the state government, the Joint Task Force, community leaders, oil companies and civil society organisations.â&#x20AC;? In his remarks, Head of the researcher team and a lecturer in the Department of Sociology in the University of Port Harcourt, Dr. Sofiri Peterside, said the amnesty programme has not addressed the cardinal issues of development in the Niger Delta. "Actually the way the amnesty programme was designed and implemented has not addressed most of the challenges we have in the region, in terms of development. "There is also the issue of exclusion, a segment of the population felt that they were not included in the way the programme was designed and also implemented. We also find out that conflict is escalating in the post-amnesty

There is need for industrialisation of the region through the establishment of cottages, industrial parks and small scale industries

Niger Delta period; for instance, there is a decline in violence but there is an upsurge in oil theft and emergence of i l l e g a l refineries in the Niger Delta region," he said. A c r o s s section of the researchers at the workshop, who also spoke w i t h SweetcrudeRe p o r t s expressed m i x e d reactions over t h e i r expectations from the new government l e d b y Muhammadu Buhari over the amnesty programme. One of them said: "If you look at the antecedents and other variables around the Niger Delta, it will be proper f o r t h e government to extend the a m n e s t y programme".

ast year the Shell Petroleum Development Company (SPDC), Nigeria's operating partner of the Joint Venture (JV) Agreement for the exploration and exploitation of crude oil deposits in Nigeria, gave notice that they would divest of their interests in its onshore and coastal oil blocks. The SPDC is an oil company whose shareholders invest in oil and gas business all over the world for profit so that it is a glaring contradiction that an oil company is relinquishing its interests in oil stakes it could have exploited for much more profit than it would make in a divestment process. About ten years ago, the SPDC scaled down its activities in Warri, Delta State office, declared several of its staff there redundant and redeployed those left in the system to Port Harcourt. Now, with the divestment of its onshore and coastal assets, the next phase of the SPDC's strategy for maximising profit with minimal operations is to fold up its Eastern operations by closing down its Port Harcourt office, Kidney Island, Port Harcourt Residential Area, etcetera, operations that inject more than a Billion Dollars annually in taxes, incomes, contracts, procurements, services, rents, transportation, entertainment, leisure and all the official and unofficial businesses that contribute to the economy of the Niger Delta. The company is content with deep sea operations that have little or no involvement with host communities. The SPDC is the official operator of the JV Agreement but it does so in tandem with other IOCs. It is anybody's guess what those other IOCs would decide to do with the stakes they have acquired in the Niger Delta. The SPDC is a business concern; the creation of jobs, business opportunities and an economic sector within a larger economy are all incidental to its primary goal of profit making. From 2004 profit making in the Niger Delta became a serious challenge for the IOCs with the commencement of activism by the states and peoples of the Niger Delta for the control of their mineral resources, the attendant militancy, kidnapping and wanton killings of oil workers, sea piracy, pipelines vandalism that created spillages and stoppages in production activities. All these activities create losses in business and the oil and gas business in Nigeria, funded predominantly by foreign capital stands on precarious ground. By 2008 the SPDC had generated a memo in which its oil and gas business in Nigeria was profiled as "high risk and low profit." Without holding brief for the IOCs, they had to contend with official payments such as operational permits, company taxes, workers' salaries and contractors' invoices; the IOCs also had to deal with issues that Nigerian governments failed to manage, issues such as the provision of electricity, hospitals, educational centres, scholarship grants, water and other basic infrastructure in order to create, maintain and sustain an operational environment. Misreading the 'generosity' of the IOCs, host communities extended their demands on the IOCs to the mundane, such as "marching ground," community halls, family halls, compulsory annual community development payments, "compensation," ex gratia payments to long lists of chiefs, community officials, youths and women groups. They also endured natives of the host communities who insisted on eating free meals at their private restaurants and enjoying free rides on company boats and helicopters. Whenever the IOCs resisted, they suffered production stoppages and were reminded that the oil they were excavating belonged to them, the natives. All these were before 2004; that year death, kidnapping, the maiming of oil workers and the destruction of operational vessels and equipment entered into a matrix that was already undermining the oil and gas business. In 2007 Umaru Yar'Adua became president of Nigeria. One of the policies he immediately introduced and became popularly for in the Niger Delta was Amnesty for the militants who had been involved in the resource control struggle. The Amnesty programme as was packaged by the Yar'Adua government had three major features, to wit: the non-prosecution of criminal offences suspected to have been committed by the militants, the provision of scholarships for militants inclined towards academic pursuits and skills acquisition training for others. Unfortunately, the government also decided to pay monthly stipends to some of the leaders and foot soldiers who had partaken in the violent struggle, others who had been involved on principle having rejected the Amnesty on the ground that it fell short of their demand: the control of their resources. The inclusion of the payment of monthly stipends to militants as 'monthly salaries' has proved to be a monumental mistake on many fronts, including the exploitation of the facility by the leaders with ghost lists, profligate lifestyles that must be sustained at the end of the programme in December 2015, the negative effects of unearned income on the local economies and now, portends to 'drive' the imminent capital flight from the Niger Delta. Investors who foresee the return of kidnapping and murder of oil workers, the wanton destruction of oil platforms, production equipment and vessels as well as general insecurity to the Niger Delta are poised to redirect their financial resources to more conducive environments. Apart from (and attracted by the implosion of) oil and gas business in the Niger Delta, Britain and the United States of America extended consular services to Port Harcourt which they withdrew in 2008 as a direct result of insecurity in the Region. Michelin and Virgin Atlantic have since shut down their operations in Port Harcourt. No economy can survive with government business alone. The people and governments of the Niger Delta have a huge task to convince investors they can convey their opposition to the divvying up in Abuja of the proceeds from resources that were extracted from their region in such a manner that does not discourage foreign direct investment; they must also let it be known that they are committed to a business culture that respects continuity.

2015 June, SweetcrudeReports