Sweetcrude Weekly Edition November 21,2018

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Seplat gets 20-year renewal of three Oil Mining Licenses

agos -- Seplat P e t r o l e u m Development Company Plc has received a 20-year renewal for its Oil Mining Licenses, OMLs, 4, 3 8 a n d 4 1 , SweetcrudeReports has learnt.

The licenses were approved by President Muhammadu Buhari and

M i n i s t e r o f Pe t r o l e u m Resources, Dr. Ibe Kachikwu, on October 21, 2018, with the licenses’ new expiry date now falling on October 21, 2038.

Seplat holds a 45 percent working interest in OMLs 4, 38 and 41. In the first nine

months of 2018, production from the licenses accounted for 92 percent of Seplat’s total oil production and 100 percent of its gas output.

In connection with the license renewal, SweetcrudeReports learnt that Seplat paid in full a

renewal bonus of US$25.9 million.

When contacted, the company, in a statement through its Chief Financial Officer, Mr. Roger Brown, to this newspaper, confirmed the development, adding that it is now working with the

Department of Petroleum Resources, DPR, to obtain the updated title deeds in connection with the renewal.

Commenting on the license renewal, Mr. Austin Avur u, Seplat’s Chief CONTINUES ON PAGE 02

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November 21, 2018

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China cuts oil imports from Nigeria over shipping cost

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Shell not sure when Trans-Ramos Pipeline will restart

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agos -- The Shell P e t r o l e u m Development Company, SPDC, says it is not sure when its ruptured Trans Ramos Pipeline, TNP, will recommence operation.

The pipeline, which ruptured on May 17, spilled as much as about 1,114 barrels of crude oil into the e n v i r o n m e n t , SweetcrudeReports’ statistical sur vey has shown.

The oil leak had impacted and polluted an estimated area of 113.03 hectares, it was gathered.

A joint Investigation Visit, JIV, report of the incident obtained by this newspaper, said equipment failure had caused leaks at three spots in the pipeline, impacting areas in Aghoro 1 and 2Ekeremor L ocal Government Area, Bayelsa and Odumodu community CONTINUES ON PAGE 03

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Fuel tanker OPEOLUWANI AKINTAYO, with agency report

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agos -- Higher shipping costs will force China, one of Nigeria’s biggest crude oil buyers, to cut its purchase of the commodity from the

country this month.

The cuts will affect not just Nigeria, but other West African countries, including Angolan, Republic of Congo, Ghana, and Equatorial Guinea, data obtained from Reuter's shipping schedule

have shown.

While China intends to cut its import of West African crude to the lowest in seven months in November, South Korean imports from West Africa will reach an 11-year high.

West African loadings to Asia

Oil marketers appeal for payment of N800bn oil subsidy debt …Assure consumers of products availability in the Yuletide

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a g o s - - O i l marketers, under the aegis of Major Oil Marketers Association of Nigeria, MOMAN, and Depot and Petroleum Products Marketers Association, DAPPMA, have appealed to

the Federal Government for prompt payment of over N800 billion outstanding subsidy debts owed them by the government.

The marketers made the appeal while addressing journalists in Lagos on the

need for government agencies saddled with making the payment to expedite action on the matter to save marketers from closing shop.

It would be recalled that on CONTINUES ON PAGE 02

will fall to about 2.33 million barrels per day, b/d, this month, equivalent to 70 percent of total exports from Nigeria, Angola, Republic of Congo, Ghana, and Equatorial Guinea, according to the data.

Asia’s demand for Nigerian and Angolan crude had dropped from October and early November, as higher shipping costs made imports uneconomical.

Shipping rates for carrying West African oil on a very large crude carrier, VLCC, to China hit a nine-month high of more than $50,000 a day in October.

The International Energy Agency, IEA, said in its November report that shipping costs had been driven up by falling Iranian exports due to sanctions by the U.S, which had forced Asian refiners to source oil from farther countries.

According to U.S. investment bank, Jefferies, average VLCC spot charter rates rose to more than $40,000 a day in late October for the first time since the fourth quarter of 2016.

The Reuters data was not specific on the volume of crude oil China will import from Nigeria this November, but it indicated that that country will import about 1.33mb/d of mostly Angolan crude during the month, down from October’s record 1.935mb/d, while South K o r e a w i l l t a ke a b o u t 167,000b/d of West African oil. South Korea has till now typically taken only CONTINUES ON PAGE 02

SWEETCRUDE WEEKLY, 21 NOVEMBER, 2018

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China cuts oil imports from Nigeria over shipping cost

Gas

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LNG shipping rates highest this month

occasional West African cargoes, because it relied more on the Middle East or North Sea suppliers, according to the report.

But the country has cut Iranian purchases because of U.S. sanctions on Iran and has sought out other suppliers, starting with a cargo of Congolese Djeno that loaded this month. India’s refiners will take 567,000b/d of West African crude in November, up from 452,000b/d in October, most of which was purchased via tenders rather than on the spot market.

Glencore, Shell, Chevron and Norway’s Equinor, among others, will supply the Indian market with a combination of Nigerian and Angolan grades.

Seplat gets 20-year renewal of three Oil Mining Licenses CONTINUED FROM PAGE 01

Executive Officer, said: “We are delighted to have concluded the early renewal of our core producing licenses, OMLs 4, 38 and 41. With the extension of the license to

LNG vessel

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agos -- Liquefied Natural Gas, LNG, shipping rates hit their highest on record this November, with several shippers heard paying $200,000 a day to transport the super-chilled fuel.

Such levels signal very little availability of vessels for December and Januar y, according to Reuters. Rates began rising as more production came onstream and as charterers, fearing even higher costs, locked in vessels for multi-month contracts.

This is now being compounded by owners of LNG with chartered ships hanging onto the cargoes in the hope of a rise in prices. Up to 20 tankers with at least 2

million cubic metres of LNG worth $400 million are floating in Asian waters, sources said.

“All traders exposed to the freight market will think twice about moving a cargo in the spot market,” said one LNG trader. “Portfolio players with a contracted fleet will perform much better. We’ll probably see more swapping cargoes.”

There were several Japanese buyers in the market — Tohoku Electric Power Co Inc awarded a onecargo tender to Qatar for Dec. 25-30 delivery, according to one trader.

Nippon Steel & Sumitomo Metal sought one cargo for mid-January delivery in a

closed tender after sounding out the market last week. And power utility Kansai Electric Power Co was seeking two cargoes for December delivery.

Pakistan’s tender for one cargo in January and two in February was still open with bids due on Dec. 5.

Gladstone, operated by Australia’s Santos, was heard offering a cargo for Dec 12-14 delivery. Abu Dhabi’s ADNOC awarded a tender for midDecember loading.

Adding to recent new supply from Australia and Russia, Cheniere Energy produced first LNG from the U.S. Corpus Christi plant, a major milestone marking the start of the third major LNG export facility operating in the

Power

Kaduna Electric sensitises customers on bills payment

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agos -- The nonpayment of electricity bills by some customers has forced the management of K aduna Electric to distribute disconnection notices to defaulting customers under Makera regional office.

In a statement, the Head Corporate Communications of the company, Abdulazeez Abdullahi, said the Business Development and Relationship Officer, Makera Rgional Office, Engr. Asmau Muhammad, disclosed this during a stakeholder engagement with customers of the regional office.

Engr. Asmau maintained that due to the persistent non-

Electricity workers payment of bills by some customers, the transformers feeding them would be disconnected as a measure

to force them to pay up their debts. The four feeders where the transformers feeding the defaulting customers get

2038 secured, we can now invest with confidence long into the future as we seek to further realise the full oil and gas potential of the licenses and continue to deliver value to all of our stakeholders”.

Oil marketers appeal for payment of N800bn oil subsidy debt CONTINUED FROM PAGE 01 affected the marketers’

October 31, the Senate Committee on Petroleum, Downstream, had directed the Ministry of Finance and the Debt Management Office, DMO, to hold a meeting with the oil marketers and other stakeholders to agree on the gray areas and report back to it within one week.

E x e c u t i v e S e c r e t a r y, MOMAN, Mr. Cement Isong, appealed to government to hasten payment of the debts, which are fuel imports subsidy arrears, as non-payment had severely limited the access of oil marketers to credit, negatively impacted their working capital and led to their inability to pay their banks and their service providers.

Isong urged the government agencies concerned to address the bureaucratic bottleneck causing the delay in the payment, adding that the delay in payment of the debt had resulted in the degradation of the downstream sub-sector of the oil and gas industry, and

business operation.

He said that MOMAN is a downstream oil and gas group made up of six major marketers which include 11 Plc (formerly Mobil Oil Nigeria), Conoil Plc, OVH Energy Marketing Limited, Forte Oil Plc, MRS Oil Nigeria Plc and Total Nigeria Plc. The MOMAN scribe assured their readiness to ensure availability of petroleum products across the country during and after the yuletide period, adding that marketers were ready to work with government on effective products distributions.

According to him, the major challenge the Nigerian downstream petroleum sector is facing is the nonpayment of the long outstanding fuel subsidy debts to the oil marketers.

Similarly, the Executive Secretary, DAPPMA, Olufemi Adewole, said the processes highlighted for payment by the government were inimical to the operations of oil markers' businesses.

supply are 11kv Chelco, 11kv Fe d e r a l H o u s i n g , 3 3 k v Gwagwada and 11kv Kakuri feeders, which affects over 42 transformers.

She said the customer population on the transformers is over 18,000 out of which only 4,000 customers are paying their bills.

Asmau appealed to co m m u n ity le a de r s a n d traditional rulers to help in enlightening their various communities on the importance of paying bills,

adding that the company will only resume supplying power to the defaulting transformers if their response to payment improved significantly.

In his contribution, Chief Gabriel Galadima, the Sarkin Kudenda, who served as the Royal Father of the Day, called on the defaulting communities to pay their bills as at when due and make sure they pay in full this month.

SWEETCRUDE WEEKLY, 21 NOVEMBER, 2018

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Power

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Nigeria’s power sector has grown by 7.5% —Fashola OPEOLUWANI AKINTAYO

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agos -- The Minister of Power, Works and Housing, Mr. Babatunde Fashola, has said that Nigeria’s power sector grew by 7.5 percent since the beginning of the Muhammadu Buhari administration.

He disclosed this while delivering a progress report on activities of his ministry. “ The evidence of our progress is not only captured

in the last quarter of the National Bureau of Statistics (NBS) Report for Q2 of 2018 which shows a growth of 7.5 percent in the electricity sector”, the Minister said.

He added that previous quarterly reports from 2017 had consistently showed growth.

Fashola disclosed that the report of survey carried out by government and feedback mechanism put in place by it, had confirmed that many Nigerians now have public

power for longer hours compared to 2015 and run generators for shorter periods compared to 2015 while they now spend less money on diesel to power their generators.

“As some citizens recently reported, they no longer have to iron all their clothes one week in advance as they previously used to do, because the supply is proving reliable and predictable even if not yet fully stable and uninterrupted," the minister said.

He stated that as the policies

Fashola on mini grids, meter asset provider, eligible customer and liquidity sustenance and improved governance deepen, the experience with power supply could only get better adding, however, that the success of the plans now would depend on “energy users who must conserve energy when not needed”.

Fashola asserted that generation, which was at 4,000 MW when he took over in the Ministry in 2015 has increased to 7,000 MW and transmission from 5,000 MW in 2015 to 7,000 MW while distribution has increased from 2,690 MW to 5,222 MW.

Freight Finance

NNPC says oil prices averaged $72.57 in July

Shell not sure when Trans-Ramos pipeline will restart CONTINUED FROM PAGE 01

in Delta state.

Although more than 95 percent of oil spilled at the pipeline have been recovered, the pipeline which supplies crude to S P D C ’ s Fo r c a d o s O i l Export Terminal, near Wa r r i , D e l t a S t a t e , remained shut-in since the incident. “ T h e Tr a n s R a m o s Pipeline has been repaired

and is undergoing extensive testing prior to restart. We cannot give precise timing yet for restart of the line as it depends on the outcome of the testing.

“Statutory post-JIV activities are ongoing, which include site assessment, remediation, and payment of compensation to people and communities impacted by the spills,” Shell’s spokesperson, Mr. Bamidele Odugbesan, said.

NNPC Tower

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agos -- The Nigerian National Petroleum Corporation, NNPC, has put average crude oil price for the month of July this year at $72.57 per barrel, as against $72.67 per barrel in June.

The corporation disclosed this in its Financial and Operations Report for July 2018.

Industry watchers attributed the oil price decline to the slight rise in the global inventories, saying the scenario is expected to continue into the second half of 2018.

In July, the OPEC Reference Basket, ORB, increased marginally by 0.07 percent to finish the month at $73.27 per barrel compared to the previous year's ORB of $68.48 per barrel in the same period.

Also, the report indicated that during the period under review, NNPC recorded 204 pipeline breaks.

It also indicated that 188 pipeline points were vandalised as against 165 recorded last month, with the Ibadan-Mosimi pipeline accounting for 124 points or 66 percent of the vandalism cases, while the Aba-Enugu,

Port Harcourt-Aba and other locations accounted for the rest.

A total of 1,858 vandalised points were recorded between July 2017 to July 2018, the report added.

Baker Hughes workers

Labour Freight Court starts case between Baker Hughes, ex-workers afresh MKPOIKANA UDOMA

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ort Harcourt -- The case involving the international oil services company, Baker Hughes, and its ex-workers at the National Industrial Court of Nigeria, NICN, in Port Harcourt has been reassigned to four judges.

This follows the stalling of the case since February this year when the original presiding judge, Justice Ibrahim Awwal, passed on few days to when he was to rule on the matter.

Recall that over 300 ex-workers of Baker Hughes. had in 2017 dragged the CEO of Baker Hughes Incorporated, Mr. Martin Craighead, and Baker Hughes

Company Nigeria Limited to NICN, over alleged unlawful disengagement by the company without commensurate severance package, as was obtainable in other countries where the company was operating, such as Gabon and Congo.

The ex-workers are asking f o r N 1 9 b i l l i o n compensation from the company.

About 14 widows who lost their husbands while in active service under the employment of Baker Hughes without c o m m e n s u r a t e compensation, had also

sued the company demanding the sum of N7 billion as compensation for their deceased husband, in line with the Workman’s Compensation Act of 2016.

SweetcrudeReports learnt that with the recent re-assigning of the case to different judges, the court is starting afresh with the case.

Lead Counsel to the defendants in the case, Barr. Y.A. Kadiri, said the court is starting afresh and would decide on how to proceed with each of the various cases.

SWEETCRUDE WEEKLY, 21 NOVEMBER, 2018

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Freight

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MKPOIKANA UDOMA

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ort Harcourt -- The Nigerian Police says it has repositioned its men to minimise cases of sea piracy and smuggling of illicit goods around the eastern seaports.

The newly-deployed Assistant Inspector General, AIG, of the eastern ports, AIG Abdulmajeed Ali, disclosed this at his maiden press briefing in Port Harcourt, on his assumption of office as the pioneer AIG of the eastern ports.

Ali said the move by the Federal Government to revive the eastern ports led to the posting of an AIG to the area.

He decried the high level of insecurity on the eastern waterways and vowed to engage every stakeholder in the industry to curb criminality, in order for the eastern ports to thrive.

“Since I came, I have noticed

Police moves to curb sea piracy around eastern ports that activities are more at Onne port than Port Harcourt port here. What we are having is the issue of insecurity at the Port Harcourt port, the threat to the lives of crew members and that is what has actually kept stakeholders away.

“If we put our hands together and synergise with all the security agencies and the community leaders, particularly the youths along that waterside where these ships come in, to stop the piracy and the kidnapping, definitely you will see activities coming up and this is what we intend to do,” Abdulmajeed said.

The assistant inspector

general disclosed that he will partner with s i s t e r agencies to prevent p i r a t e attacks on p o r t s facilities and port users.

He also promised to harness all human and material resources to achieve results through intelligence and community involvement.

Tidewater, GulfMark consolidation creates largest OSV fleet

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agos -- The recent consolidation between GulfMark and Tidewater has created the largest offshore support vehicle, OSV, fleet in the industry.

The development is seen as a positive for the market.

"With Tidewater’s steadfast and unyielding attitude towards the scrapping of nonperforming vessels, this is a good chance for the market to reduce some of its oversupply," according to

VesselsValue. "Hopefully with this new entity taking the lead, other market players might follow suit", VesselsValue added in a statement by Associate Director, Claudia Norrgren.

It added that "consolidation in today’s market only works if lenders are willing to take haircuts and provide an opportunity for these companies to start afresh with a clean balance sheet".

According to VesselsValue,

"in the case of Solstad Offshore, they undertook restructuring and consolidation as well.

However, without a clean balance sheet, problems are only going to resurface further down the road.

"Bourbon is another major player who have struggled to service their debt and are actively looking for financiers.

Kicking the can down the road is not a viable option in this market".

Pirates Added he: “Most especially I intend to partner with NPA (Nigerian Ports Authority) and other critical stakeholders like the ports terminal operators, businessmen, eminent persons in the industr y, associations, and unions operating in the port.

“Also, I intend to partner with the traditional rulers, the youths of host communities and all the sister agencies, members of the press, all with the view to stem criminal activity and allow eastern ports to thrive.”

Troms offshore, A Tidewater Company vessel

Community

IYC factions clash over surveillance job in OML 30 communities LUCKY OMAS

Ogoni clean-up

Ogoni clean-up: Civil society groups flay HYPREP over slow pace MKPOIKANA UDOMA

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ort Harcourt -- The Civil Society Organisations, CSOs, in Rivers State have attributed the slow pace of the process of the clean-up of the oilimpacted Ogoniland to excessive bureaucracy within the H y d r o c a r b o n Po l l u t i o n Remediation Project, HYPREP. The CSOs, during a workshop organised by the Centre for EngineeringHuman trainees Rights Environmental, and Development, CEHRD, in Port Harcourt, accused HYPREP

Of doing next-to-nothing in the provision of potable water for the Ogoni people or sensitised them on its efforts.

L eader of Social Action, Dumnamene Fyneface, said HYPREP lacked proper policies for proper conduct of the cleanup, adding that "whatever cleanup process done today without putting the vital facilities recommended in the United Nations Environmental Programme’s report would amount to an exercise in a vacuum".

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arri, Delta State -- Two factions of the Ijaw Youth Council, IYC, are currently locked in a battle over the company to handle a pipeline security job in the 111 host communities of Oil Mining Lease, OML, 30.

The Eric Omare-led faction of the council is drumming support for Ocean Marine Services.

Omare, in a statement made available to newsmen and signed by some youth presidents, said Ocean Marine should be allowed to operate the surveillance, adding that it is a firm owned by a Niger Deltan.

EDITOR Chuks ISIWU

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But, a spokesman of the other f a c t i o n o f I YC , M r. D a n i e l Dasimaka, and the legal adviser, Iyegbata Ayebakuro, kicked against Ocean Marine handling the surveillance job.

The statement by the Omare faction read: “For the records, Ocean Marine Service is also an indigenous company owned by a Niger Deltan and is managed by Deltans and other Niger Deltans.

The company has of course proven to be efficient in deploying community people in their operations.

"In actual fact, we the youth leaders of Delta State had

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commended the community engagement strategy of Ocean Marine Services in the execution of such job in the past because of their community-driven approach to oil facility security.

"We call on the relevant authorities, especially the Delta State Government and Federal Government, to completely disregard the sponsored youths and fake ex-militants (who are against Ocean Marine). It is important to state that no exmilitant or community youth leaders participated in the protest. It is just a fake claim to mislead the general public to take them seriously".

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