Nigeria: Shell Disagrees With Amnesty, CEHRD Over Oil Spills Investigations

The Shell Petroleum Development Company of Nigeria (SPDC) has described as “unsubstantiated assertions”, a recent statement by Amnesty International and the Centre for Environment, Human Rights and Development (CEHRD) that it manipulates investigations into series of oil spills in Nigeria.

The two global bodies had declared that Shell's claims on oil pollution in the region were "deeply suspect and often untrue."

Crude Oil Theft: Act Of Terrorism Or Lack Of Political Will?

Recently, the Minister of Petroleum Resources raised the alarm over the increasing menace of crude oil theft describing it as another face of terrorism. JULIET ALOHAN takes a look at the situation and writes on whether the challenge is insurmountable or simply aided by the lack of political will to confront the threat on the nation’s commonwealth

The rising level of crude oil theft and pipeline vandalism particularly in the Niger Delta region has reached an all-time high with the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke recently describing it as another face of terrorism. The menace which led to the declaration of amnesty for repentant militants in the Niger Delta region by the late President Umaru Musa Yar’Adua, has assumed an even higher dimension prompting the question about the effectiveness of the amnesty programme which is costing government billions of naira.

Industry observers believe that the amnesty programme for militants seems to have waned, going by available statistics of crude theft. Statistics show that a total of 350,000 barrels per day (bpd) was lost to illegal bunkering in 2012, representing an increase of 45 per cent over the figure for 2011, and 67 per cent over that of 2010, while the trend for 2013 is even more alarming. They insist that unless government summons the will to fight the menace the situation will further worsen the country’s economic woes.

One Too Many Attacks
The ugly development has made operations in the Nigerian oil and gas industry one of the most expensive in the world according to the Chairman of Shell Companies in Nigeria, Mutiu Sunmonu.  Attacks on production facilities have led to several shutdowns and declaration of force majeure by the International Oil Companies (IOCs), ultimately resulting in loss of revenue to the government. In April, 2013, oil giant Shell; shut-down the 150,000bpd Nembe Creek oil pipeline due to the urgent need to clear away illegal connections.

Nigeria Agip Oil Company (NAOC) in the same month declared a force majeure regarding crude oil lifting at the Brass terminal and suspended its activities in Bayelsa State, following the intensification of illegal bunkering activities and the vandalisation of the 10-inch Kwale-Akri-Nembe-Brass oil delivery line. Another explosion and fire at a crude theft point on Shell’s facility at Bodo West in Ogoniland also forced the company to shut the Trans Niger Pipeline (TNP), in June 2013, deferring some 150,000 barrels of oil per day (bpd), to mention just a few.

Data from the NNPC revealed that 53 break points were discovered along the 97km Nembe Creek Trunkline in the first quarter (Q1) of 2013 reducing April and May monthly average oil production to about 2.2 mbpd and decreasing revenue that should have accrued to the Federation Account for the period by about $554.0 million (equivalent to N83billion).
Acting Spokesperson of the Corporation, Tumini Green, disclosed that crude oil production within the period dropped to 2.1 million bpd as against the estimated production figure of 2.48m bpd.

Failed Attempts To Tackle Challenge
Several attempts have been made by the federal government to tackle the challenge to no avail. The collaboration forged between the NNPC and the Inter Agency Maritime Operation Committee, whose members are drawn from the NNPC, Nigerian Navy, Air Force, Customs, Police, SSS and the Judiciary has not done any good.

In a meeting with Yakubu in Abuja, the Chairman of the Operation Committee, Rear Admiral E. O. Ogboh, said the committee was established with a mandate to address the issue of illegal bunkering in the nation’s maritime waters, but crude theft still thrive in the face of the collaboration.
There has also been the constitution of a Committee by the National Economic Council (NEC), comprising of some Governors, NNPC, Department of Petroleum Resources (DPR), IOCs, security agencies and other relevant bodies to work out modalities to mitigate the menace to no avail. Even the juicy pipeline protection contract awarded to some ex-militants warlords at a combined sum of N5.6 billion ended up as yet another drain on the nation’s scarce resources.

A breakdown of the contract showed that Mujaheed Dokubo-Asari got $9 million, Ebikabowei “Boyloaf” Victor Ben and Ateke Tom, each got $3.8 million, while Government “Tompolo” Ekpumukpolo, got the largest share of $22.9 million to engage their foot soldiers to protect the pipelines, but the menace has remained on the increase.

To further worsen matters, it has been alleged that some bad eggs in the Military Joint Task Force (JTF) deployed to the region to protect oil personnel and facilities have been accused of complicity in the illegal bunkering activities. Not even the much hyped crude oil finger print which Nigeria claims to be championing to detect crude oil theft as purchased by other nations has helped matters.

Alleged Culpability Of International Community
The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, recently declared that the grave phenomenon of oil theft and its global support system has continued to remain a cog in the wheel of the nation’s high economic growth trajectory. While delivering a presentation titled, “The Strengths and Obligations of the African Diaspora,” recently in London, at the Powerlist 2014, the minister said efforts at combating the menace locally is made more complicated because of the international slant of the crime.
“Theft of this magnitude is not only highly technical, but it is also an international-level crime.  It is aided and abetted by syndicates outside of Africa who are the patrons and merchant-partners of the oil thieves,’’ she said. She also made a similar accusation while speaking at the 2013 Offshore Technology Conference (OTC) in Houston, Texas, USA, where she called on the global community and international oil traders to drop the appetite for stolen Nigerian crude oil.
Presenting a paper with the theme: ‘Development efforts in the West African Exploration Zone,’ the minister who spoke through the NNPC GMD, Engr. Andrew Yakubu said, “It takes two to tango, if those stealing our crude do not find a market for it there would be no incentive to steal that is why we are appealing to the international community to take action.”

Economic Implication
In the meantime, while government battles with how to effectively bring the situation under control, it is estimated that between $6bn and $12bn is lost to crude oil theft annually, with oil theft peaking at about 350,000 barrels per day (bpd), higher than the quantity of oil produced daily by Gabon or Equatorial Guinea.
According to the Group Managing Director of NNPC, Engr. Andrew Yakubu, the persistent attacks on major pipeline arteries supplying crude oil to export terminals has impacted negatively on the nation’s economy. Speaking  during his submission to the Senate and House of Representatives Joint Committee on the Medium Term Expenditure Framework (MTEF) for the period of 2014 to 2016, Yakubu lamented that the continuous crude oil theft, pipeline vandalism and shut-ins have constrained the sector from meeting its revenue projection. He said the oil and gas sector is a key component of MTEF adding that any impact on it will have a negative effect on revenue flow to the federation account.

“The critical and most important point to note here is that when the artery conveying crude oil to the terminals is hit, this reduces our production volume by 150,000 barrels per day and for the period that the line is down that accounts for the drop in crude oil production. From February to date we have witnessed so much breaches and each time we go down about 150,000bpd goes down,” Yakubu informed.
He said the daily crude oil production figure for 2013 has been very erratic as a result of the several attacks on the arteries stating that crude oil production figure ranges between 2.2mbpd to 2.3mbpd.  According to the Corporation, about $2.23 billion (N191bn) revenue that should have accrued to the federal government from oil proceeds was lost to the activities of crude oil thieves in the first quarter (1Q) 2013 alone.

Way Forward
Appalled by the worrisome level of crude theft, experts and industry captains have picked holes in government approach to tackling the menace and called on the federal government to apply multi-dimensional strategies towards finding a lasting solution to the challenge. Managing Directors of IOCs who spoke at the 2013 Nigeria Oil and Gas (NOG) Conference and Exhibition in Abuja, noted that the issue of crude theft has grown to become an organised industrial scale business requiring more than one approach to fight.

In his presentation, SPDC Chairman, Mutiu Sunmonu, said the war against crude theft is no longer a war against the poor people of the Niger Delta, “it is a war against the big fishes,” he stated. While noting that the finger print tracing which the federal has decided to adopt as part of efforts to end crude oil theft, was crucial, Sunmonu maintained that the country still needs to apply other strategies.

“We need strategies to engender some sense of outrage so that all Nigerians can see crude theft as crime against humanity and the environment and begin to condemn it,” he said. He also advised the government to look for ways to make it more difficult for the oil thieves to access the pipelines by laying the pipes deeper below the ground. “I don’t think one solution is okay, government has to look for multidimensional strategies to end this challenge,” Sunmonu maintained.

For his part, Managing Director of ExxonMobil Nigeria, Mark Ward advised the federal government to look into the issue of poverty in the host communities which he maintained was playing a major role in the rising level of crude theft. Also speaking, former Venezuela’s Minister of Energy and Mines, Dr. Alirio Parra, urged government to apply four major strategies which he listed as identifying the market where Nigeria’s oil is sold, tracking the money from the illegal business, incorporate the communities in the fight against bunkering and to raise public outrage against crude oil theft.

Furthermore, an industry expert who spoke to LEADERSHIP on the matter explained that the pipelines, being strategic assets, ought to be conventionally outsourced by government to competent companies for protection, where it feels it is not capable of protecting them.  According to him, the global practice is that the owner of the assets works out the safety and security needs assessment of the infrastructure using a consultant, and where needs be, contract a third party to protect the assets if it becomes obvious that it cannot protect it.

He however, stressed that such services are usually contracted to the best companies after advertisement and specifying which artery of the network is most prone to vandals that needs protection. The expert who did not want to be named said the manner in which the pipeline protection contract was handed over to ex-militants under the table sends the wrong signals to the international community over Nigeria’s commitment to the principles of extractive industry transparency, which the country is a signatory to.

Also speaking to LEADERSHIP, Nigeria’s representative on the Board of the Global Extractive Industry Transparency Initiative (EITI), Faith Nwadishi expressed worry that despite the contract awarded to the ex-militants and the money paid to the JTF for the protection of the assets, no visible result has been seen.  “The question to be asked is what has changed since ex-militants were paid this money? Why are we not getting results? Is the money meant for jamboree? Are they paying it to them to acquire their ships and enlarge their cabal?” Nwadishi who is also the Country Director of Publish What You Pay Nigeria, queried.

Against the background, there is therefore, the need for government to put sentiments and blame-game aside and engage in strategic reassessment and re-orientation towards bringing the challenge to an end in the interest of the nation’s economy.

If US attacks Syria, crude oil may surge to $150/barrel - Expert

If US attacks Syria, crude oil may surge to $150/barrel but, going by experience, Indian users know the price will return to more realistic levels and are also reconciled to fuel price hikes.

August 31, 2013:  

The last time India experienced a oil shock was in August 2008 when crude prices galloped to $148/barrel. It was a difficult period when public sector oil marketing companies were near collapse as fuel losses soared.

Today, as tension levels rise in West Asia, with the US threatening to strike Syria, crude oil prices have once again reacted and are inching towards $120 a barrel. There is fear that a crisis could affect supplies from West Asia, and importers such as India (which coughs up over $170 billion annually for its crude oil) will face the brunt. 

It is still a million-dollar question if the US will go ahead with its plans to attack Syria, but the uncertainty is enough to prompt a surge in crude oil prices. “And, should the strikes actually happen, we will not be surprised if crude touches $150 a barrel ,” says a top-level PSU oil sector official.

Will it, therefore, be back to the grim days of 2008, when IndianOil, Bharat Petroleum Corporation and Hindustan Petroleum Corporation were incurring annual losses of over Rs 250,000 crore? In fact, these companies were actually borrowing heavily to stay afloat since the government compensation was slow in coming.

At one point, reports began doing the rounds that if the crisis continued, fuel supplies would be severely affected as a result of refinery shutdowns. “It was an impossibly difficult period when all of us were stressed out and wondering how long we could keep going,” recalls the official.

The Government compensation finally came with added support from the upstream oil companies (ONGC and Oil India) but the damage had been done. The three refiners were battered and this was reflected in their results in 2008-09. The silver lining was that crude had come back to the $40-a-barrel level during the last quarter of the fiscal; the alarm bells fell silent.

Prepared now

The oil industry is, however, a lot more composed this time around even as crude prices stay uncomfortably high. Part of the reason could be because everyone is reconciled to the fact that crude oil will not go below $100 a barrel. “This is the new reality and we are not naïve to think that prices will nosedive to $60 a barrel,” says a finance executive.

By the same yardstick, the think-tanks in these companies are only too aware that any sharp escalation in crude prices (as a result of the crisis in Syria) will only be temporary. It is only a matter of time before they are back to the more realistic levels of $100-105 a barrel.

Deregulation of fuels

The companies are also assured by the fact that the Government has kicked off the process of deregulating petrol and diesel. There have been blips along the way when petrol prices were not allowed to be raised during state elections but the constant dithering of yesteryear is clearly a thing of the past. Today, even the end-user is unhappily aware that a steep diesel price hike is round the corner despite the inevitable political opposition that will follow. The managements of IOC, BPCL and HPCL have also become more pragmatic to the realities of a new pricing regime. Panic and uncertainty were natural reactions in 2008 because nobody had quite seen anything as dire. “You only get tougher and more cynical with experience,” quips an oil industry veteran.

Does this mean there is little to worry about this time around? On the contrary, it is going to be a tough period, especially when the rupee has been ravaged and the economy is in dire straits. At the end of the day, it is going to be yet another rollercoaster year for India’s oil sector. Nobody is, perhaps, too vocal about it any longer because they have seen this scenario remain unchanged for the last six years now

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Nigeria’s Oil Sector: Bumpy Ride No Doubt, But Many Cause For Cheer

Despite the many challenges, there are a few reassuring glimpses that presage a better future for Nigeria’s oil sector. This, writes Shaka Momodu, owes much to the gritty resolve of petroleum minister, Mrs. Diezani Allison-Madueke

There’s no question about that; the petroleum sector is the primary driver of Nigeria’s socio-economic development - being the chief foreign exchange earner. Perhaps, its then not surprising that over 50 years’ experience in the oil and gas industry continues to reveal the complex dynamics of balancing global energy security, domestic economic growth, climate, and environmental considerations. Currently, all alternative revenue generation efforts and options for the country pale when compared to the sheer size of petroleum revenue in Nigeria.

The sector has drawn and continues to attract intense focus, wrangling and debate. In effect, being the key driver and supervisor of this all-important ministry then poses the most policy-making, operational and structural challenges - more than that experienced by any other Nigerian minister. This has been the lot of Mrs. Diezani Allison-Madueke, the nation’s first lady petroleum minister. But significantly the Bayelsa-born technocrat has shown surprising strength, focus and vision.

On top of her game, the minister herself succinctly captures key grounds her ministry had covered in the preceding two years, a detail presented during the recent mid-term report. Her words: “The Ministry of Petroleum Resources has in the last two years vigorously pursued the Transformation Agenda of President Jonathan’s administration. Oil and gas which is the mainstay of government revenues and expenditure in Nigeria is critical to supporting various policies and programs of government.

“The Ministry of Petroleum Resources through its parastatals gives effect to government’s aspirations in the oil and gas industry and has a direct link with the ability of the government to deliver on transformation agenda through - building sustainable industries with indigenous participation; delivering quality products to the Nigerian people and creating oil and gas institutions of the future.”

More specifically, she stated that the key accomplishments in the period 2010-2013 cover the entire oil and gas value chain namely; Upstream - “where we have increased exploration in frontier areas and sustained production in spite of incessant crude theft and pipeline vandalism; Midstream (Gas) - where we have increased gas supply to power, enhanced gas commercialisation, implemented the gas infrastructure plan and gas for industrialisation.”

In the midstream (Oil) and downstream arenas, Mrs. Allison-Madueke identified the ongoing repairs and upgrading of facilities in the refineries and pipelines distribution network in order to sustain in-country product supply. In the downstream, Nigerians are of course witnesses to the product supply stability that is often taken for granted now. “We have ensured stable supply of petroleum products in spite of pipeline vandals and product theft, effective and efficient administration of the subsidy programme which remains unsustainably expensive and increased domestic refining,” she had further explained.

Perhaps of more than passing significance are specific improvements in local capacity and indigenous participation in infrastructure investments which have been vigorously pursued. The observable outcome has been in upgraded training facilities and increased regulatory compliance with local content requirements.

Going forward, some of the key positives of the petroleum ministry within this period cover the following arena:

PIB
One of her most important achievements is putting together the Petroleum Industry Bill (PIB), now before the National Assembly and generating all sorts of controversy. The Bill essentially targets a fundamental restructuring of the petroleum industry to maximize returns on the country’s investment in the oil and gas sector. Stemming from the Oil and Gas Reform Implementation Committee (OGIC) empanelled to review the subsisting 16 laws that governed the nation’s hydro-carbon resources arena, the PIB represents a one-stop-shop legislation that would guide the sector and effect a pro-Nigeria restructuring of the country’s lop-sided relationship with international oil companies (IOCs).

The initial efforts to push the PIB were scuttled in the Sixth National Assembly. no thanks to intense intrigues that stoked a few business divestment from Nigeria as well as prospective investors heading to nearby countries such as Angola, Ghana and Burkina Faso which boasted more stable policies. Today, for Nigeria, the story appears different.

The PIB cobbled under the watch of Diezani essentially incorporates the legal outline that will delineate and shape the oil sector. The creation of a conducive business environment for petroleum operations; optimization of domestic gas supplies, especially for power generation and industrial development; establishment of a progressive fiscal framework that encourages further investment in the petroleum industry while optimising revenues accruing to the government; the establishment of commercially oriented and profit-driven oil and gas entities; as well as the deregulation and liberalization of the downstream petroleum sector form central pegs of the PIB.

Midstream Oil (PPMC)
Of great importance is the rehabilitation and upgrade of PPMC major petroleum pipelines and strategic product depot facilities across the nation. “After many years of being inoperable due to pipeline vandals, the Port Harcourt – Aba product line has been rehabilitated and the Aba product Depot was re-commissioned after seven (7) years of inactivity. This has enabled products to be sent directly from the Port Harcourt refinery to Aba for onward distribution in the Eastern parts of the country. Aba – Enugu product pipeline is expected to be recovered by third quarter, 2013.

Similarly, Warri – Benin product line has been recovered and the Benin depot has been re-commissioned. Other lines recovered so far include: Kaduna – Suleja, Kaduna – Gusau, Suleja – Minna, Kaduna – Jos and Jos – Gombe all of which are now fully operational.

According to the Minister, her ministry is aggressively working on the recovery of the remaining product pipelines and depots namely; Enugu – Markurdi; Gombe – Maidugri and Markurdi – Yola. “Restoration work in the refineries and pipeline distribution network / storage systems have contributed to stable supply of petroleum products across the country despite the challenges of vandals and the criminal activities along these vital and critical infrastructure.”

It is to the credit of the Minister and PPMC that despite stoppage of importation by the oil marketing companies during subsidy saga, the nation did not witness any significant disruption in product supply across the country.

Growing reserves and production
The ministry in line with government’s drive to achieve the national aspiration of 40 billion barrels of oil reserves and 4 million barrels of oil per day production, including condensate, as captured in vision 20:20:20, has increased exploration activities in the Offshore, Onshore and Inland Basins.

From THISDAY checks, in order to meet the above national target, a total of 19 exploration wells were drilled comprising eight exploration wells in the JV and 11 wells (3 Exploration and 8 Appraisal wells) under the PSC in 2012.
A further 93 development wells were drilled comprising 55 development wells under JV while the PSC delivered 38 development wells and within the same year, 33 Workover wells were also drilled consisting of 32 work-over wells under JV and 1 workover well in PSC.

The petroleum ministry has significantly maintained crude oil production (including condensate) above an average of 2.30 Million Barrels per Day (MBOPD) despite illegal oil bunkering, crude oil theft and pipeline vandalism. Following the federal government’s amnesty programme, Nigeria’s production rose from an average of 1.9 mmbopd in 2009 to a peak of 2.62 mmbopd in October 2010.

Sustaining production at these levels continues to be challenged by increasing pipeline vandalism and crude theft, which intermittently results in production falling below the programmed 2.46 mmbopd and rebounding following government intervention to stem this menace. But happily, the government is tackling this problem through enforcement and the Crude Oil Fingerprinting Initiative.

The local content challenge
The Nigerian Oil & Gas Industry Content Development Act 2010 (the “Local Content Act” or “NCA”) received presidential assent on Thursday, April 22, 2010. Now in operation, the Act seeks to increase indigenous participation in the Nigerian oil and gas industry (the “Industry”) by prescribing, inter alia, minimum thresholds in relation to the utilization of local services and goods.

The Local Content Act which derives from the Nigerian Content Policy focuses on the promotion of value addition to the Nigeria economy through the utilization of local raw materials, products, and services in order to stimulate growth of indigenous capacity.

The NCA accords certain privileges and preferential treatment to companies that qualify as “Nigerian Companies” pursuant to the Act, including preferential treatment in the award of contracts for projects in the Industry. To qualify as a Nigerian Company under the NCA, a minimum of fifty one per cent (51%) of the issued shares must be held by Nigerian shareholder(s); whilst the remaining forty nine per cent (49%) of its issued shares can be held by foreigners.

Nigeria’s product supply and distribution system consists of about 5,000km of pipeline network interconnected to the four refineries with a total capacity of 445kbd at three locations namely Warri, Port-Harcourt and Kaduna. The reliability of this network holds the key to sustainable supply of petroleum products across the country.

Nigeria’s petroleum product consumption for white products is estimated at about 38 Million Liters PMS , 12 Million Liters AGO and eight million litres DPK, whose production is inadequate for meeting domestic consumption even if they operate at design level. This scenario has led to importation of products from proceeds of crude exports to supplement supply from domestic refineries.
The plan going forward is to rehabilitate the refineries so as to obtain maximum production from them. This will meet about 70 percent of the country’s needs. The deficit will be met by on-going plans to construct Greenfield Refineries. The ministry is also cooperating with private initiatives for construction of new refineries and have progressed with plans for rehabilitation of the refineries commencing with the Port Harcourt refinery.

Clearly, these challenges will continue to drive innovation and change in the petroleum ministry’s approach to delivering an oil and gas industry that is internationally competitive and is governed by open and transparent processes to ensure security of investment for both domestic and international investors.

Who Steals Nigerian Crude Oil?

“Insanity has been described as doing the same thing over again and expecting a different result.”

Nigerians have been treated to a theatre of the absurd in which those close to the oil scene and those who should be the prime suspects for the incessant theft of crude are the same people complaining about it and passing the buck among themselves. Jonathan’s government is obviously powerless to stop the grand larceny or is unwilling to do so. Meanwhile, we face real fiscal catastrophe this year and next year if the theft is not checked. Who are the culprits? Take your choice from the list below.

“Oil workers………
“Security agents……
“NNPC officials…..
“Top govt officials….
“Militants…….

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All Eyes on Iran’s Next Oil Chief

Bottom Line: Newly elected Iranian President Hassan Rohani has chosen his new oil minister, but the Supreme Leader is sending signals that the choice is not acceptable to hardliners.

Analysis: Rohani has chosen Bijan Namdar Zanganeh for the country’s new oil minister. Zanganeh has served as oil minister before, under president Mohammad Khatami. He left the post in 2005. Hardliners see him as too soft and there feathers were particularly ruffled by Zanganeh’s record of selling gas below market prices to foreign countries. That the Iranian Supreme Leader is against Zanganeh’s appointment was made clear in a scathing criticism of him that appeared in an Iranian newspaper controlled by the Supreme Leader’s camp.

Nigeria: Fresh Initiative to Curb Oil Theft Launched

A fresh initiative to curb the widespread oil theft in Nigeria known as 'Publish What You Pump' was Wednesday inauguration by a coalition of civil society groups in the country The advocacy campaign is aimed at filling the gap in the present initiative and the Nigeria Extractive Industries Transparency Initiative (NEITI) processes.

At the event in Port Harcourt the Rivers State capital, which was graced by representatives of civil society groups, community-based organisations and the media, the Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) said although the NEITI processes had been ongoing for nearly 12 years, it had largely failed to sanitise the nation's petroleum sector or reduce the level of corruption as the country loses nearly 500,000 barrels of crude oil per day, costing the nation about $8 billion a year.
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Agric to displace crude oil in revenue generation - Minister

Nigeria’s economy within the next 10 years would be braced mainly by revenue from agriculture rather than oil, going by the government’s sustained efforts towards reposition the sector, Minister of Agriculture, Dr Akinwumi Adesina, has assured. The minister said by 2015, the ongoing revolution in the agricultural sector would have become visible with the eagerness by farmers to ensure food security with production of large quantities of cassava, rice, beans, canned fruit juices and others for both domestic consumption and exports.
He made this known in Abuja as he explained that part of the transformation agenda by President Goodluck Jonathan was to develop the agricultural sector to generate revenue as an alternative to crude oil.
He disclosed that the target of the agricultural transformation agenda was to provide not less than 3.3 million jobs by 2013, while also targeting the production of 20 million metric tonnes of food by 2015.

Oil slips after China orders industrial capacity cuts

World oil prices slipped on Friday after China ordered industrial production capacity cuts in the face of slowing economic growth.
The government action added to market concerns about weakening demand in China, the world's second-largest economy.
New York's main contract, West Texas Intermediate (WTI) for September, finished the trading session at $104.70 a barrel, down 79 cents from Thursday's close.
The European benchmark contract, Brent North Sea crude for delivery in September, fell 48 cents to $107.17 a barrel in London trade.
"The news out of China that they are forcing a cut in excess industrial capacity is a very bearish factor for crude oil," said John Kilduff of Again Capital.

UK police probing Shell, ENI Nigerian oil block deal

British police are investigating a money-laundering allegation related to a big oil field bought by Shell and ENI from Nigeria for $1.3 billion (€984 million), after most of the cash they paid ended up in a company linked to a former Nigerian oil minister.

The probe concerns offshore block OPL 245, which industry sources say contains up to 9.23 billion barrels of crude – more than enough to keep China running for 2½ years – the ownership of which had been in dispute for more than a decade.

China's crude oil output slightly up

BEIJING - China's crude oil output rose slightly year on year in the first half of 2013, according to data released Friday by the country's top economic planner.

The National Development and Reform Commission (NDRC) said in a statement that crude oil production stood at 103.31 million tonnes in the first six months, up 3.2 percent from the same period last year.

The country refined 217.46 million tonnes of crude oil during the first half, up 6.6 percent year on year, while refined oil products rose by 6 percent to 133.77 million tonnes, the NDRC said.

Apparent consumption of refined oil products rose 4 percent from a year earlier to 126.54 million tonnes.

In the same period, natural gas output rose 9 percent to 58.8 billion cubic meters, while imports climbed 24.6 percent to 24.7 billion cubic meters.

Apparent consumption of natural gas climbed 13.1 percent year on year to 81.5 billion cubic meters, according to the statement.

Global oil prices hit 15-month high point

LONDON Global oil prices hit a 15-month high point on Thursday, boosted by signs of strengthening demand in top consumer the United States and ongoing supply fears linked to violence in Egypt, dealers said.

New York’s main contract, West Texas Intermediate for delivery in August, spiked to $107.45 a barrel -- a level last seen in late March 2012. It later stood at $106.02, down 50 cents from Wednesday’s closing level.

Brent North Sea crude for August rallied to $108.93 a barrel -- reaching a high last seen in early April 2013 -- before pulling back to $108.20, down 31 cents from Wednesday.

Crude futures had already scored multi-month highs on Wednesday after the US Energy Information Administration’s (EIA) weekly crude stockpiles data indicated a major pickup in energy demand.

The EIA said crude-oil stockpiles tumbled by 9.9 million barrels in the week ended July 5. That was more than triple the 2.9-million-barrel drop expected by analysts polled by Dow Jones Newswires, and followed the prior week’s drop of nearly 10 million barrels.

Added to the picture, traders remain deeply concerned over potential disruption in Middle East supply following the overthrow last week of Egypt’s president Mohamed Mursi.

“The spike in oil is driven by three things; optimism over improving economic conditions in the United States, fears of escalation in Egytian unrest, and lower US inventory levels,” said analyst Ishaq Siddiqi at trading firm ETX Capital.

Crude Oil Stays Above $108

Crude oil prices held above $108 per barrel Friday morning in New York. On the New York Mercantile Exchange, West Texas Intermediate crude added 30 cents to $108.11 per barrel. A long rally in equity markets supported higher prices, which were bumped up recently by political tension in Egypt.
On Friday morning, reformulated blendstock gasoline added 5.22 cents to $3.162 per gallon. Home heating oil added 2.06 cents to reach $3.1213 per gallon. Natural gas lost 2 cents to $3.792 per million British thermal units. At the pump, the national average price for a gallon of unleaded regular gasoline was $3.672, up from Thursday's $3.669, the AAA Fuel Gauge report said.



Source: Copyright UPI 2013

What’s wrong with the global oil market?

Recent developments in domestic energy production have shifted the political debate about energy independence. Yet as the discussion focuses on finding a desirable mix of American energy sources, policy decisions must account for a global oil market distorted by the interventions of foreign governments.

Some may think this doesn’t matter because the domestic oil boom offers the United States a chance to reclaim the title of the world’s largest oil producer. Estimates suggest that there are more than seven billion barrels of oil in shale formations in the Dakotas and Montana alone. If more federal lands were opened to exploration, there is no doubt Americans could soon lose the need to import oil.

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India pips US as Nigeria’s biggest crude oil buyer

India has overtaken the US as the top buyer of Nigerian crude oil.

Indian High Commissioner to Nigeria Mahesh Sachdev said recent statistics showed that India had been buying more of Nigeria’s crude than the US over the last three months.

“India will continue to cooperate with Nigeria to improve its economy and it will also assist the country in capacity building of workers in both the public and private sectors,” Sachdev said, during a courtesy visit to the Governor of Niger state in northern Nigeria last Wednesday.

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India Now Nigeria’s Biggest Crude Oil Buyer

INDIA High Commissioner in Nigeria, Mr Mahesh Sachdev, on Wednesday, said that the Indian government now leads the United States in the purchase of crude oil from Nigeria.

He disclosed this during a courtesy call on Niger State Governor, Babangida Aliyu, at the government house in Minna. He said recent statistics showed that India had been buying more of Nigeria’s crude than the United States government over the last three months.
Sachdev also said that bilateral trade between Nigeria and India had hit $10bn mark while India’s investment in the country was valued at $16.6bn.
The envoy said India would continue to cooperate with Nigeria to improve her economy, adding that India would assist Nigeria in capacity building of workers in both the public and private sectors as one of the ways to revamp Nigeria’s economy.


“To reduce unemployment in Nigeria, the Indian government is now partnering with the Kano State Government for the establishment of a film city. We will also collaborate with the Niger State Government to create health care facilities and improve agriculture as well as embark on vocational training of youths towards self employment,” Sachdev said .
Responding, Governor Aliyu commended India for being one of the few countries in the world that had kept faith in the policy of strengthening the civil service, saying that the retention of the policy had helped the country to develop in all ramifications.
He therefore urged Nigeria to take a cue from India for the rapid economic development of the country, adding that if peace prevailed in all parts of the country the economy would be revived.

Nigerian government holds crisis talks with oil unions over strike threats

Lagos (Platts)--5Jul2013/552 am EDT/952 GMT


The Nigerian government, led by oil minister Diezani Alison-Madueke held talks Thursday with the country's two oil worker unions, in a bid to stave off a strike that could potentially disrupt oil production and exports.

Nigerian blue-collar oil workers union Nupeng on Tuesday called off a planned three-day strike to protest against planned job cuts by foreign companies. It has, however, threatened to go on indefinite strike if the government fails to halt plans to sack its members as well as regularize the employment status of several hundred others.

The other workers union Pengassan has also issued an ultimatum to the government, demanding that it address widespread oil theft in the country. The deadline expires July 5.

A statement issued by the office of the oil minister said that at the end of Thursday's meeting held in Abuja, a 12-point resolution aimed at addressing the grievances of the unions was adopted.

"In the 12-point communique jointly endorsed by representatives of all stakeholders, far reaching decisions [were] adopted on all the items put forward by the unions as areas of concern," the statement said.

The government agreed to include the unions in a special committee set up to look into the rise of oil thefts and pipeline sabotage, which has disrupted production and, in some cases, exports.

"It was resolved that the unions should submit the list of all unfair labor practices to the 13-man committee headed by permanent secretary, Ministry of Petroleum Resources," the statement said.

The unions' grouse on the irregular status of junior oil workers is to be addressed by the labor ministry.

A general strike by oil workers will severely hurt Nigeria, whose economy is already under serious threat through widespread oil theft, illegal bunkering and pipeline sabotage.

The finance ministry said in late June that oil theft and pipeline vandalism were responsible for a 5% fall in Nigeria's revenue in the month to Naira 590.77 billion ($3.7 billion) compared with Naira 621.07 billion in the preceding month.

Nigeria's biggest producer, Shell, which put in place force majeure on exports of Bonny Light crude grade following disruptions to production because of attacks on its pipelines, has estimated that up to 150,000 b/d of crude oil is stolen in Nigeria, out of a total production of a little over 2 million b/d.

Oil Futures Settle Above $100 a Barrel on Egypt, Stockpiles

--Nymex crude up $1.64 at $101.24/barrel
--Tensions in Egypt raise investors' concerns
--U.S. oil stockpiles fell 10.3 million barrels last week, the EIA said

 
  By Sarah Jacob and Dan Strumpf 
 

NEW YORK--U.S. oil prices settled above $100 a barrel Wednesday for the first time in more than a year, following political uncertainty in Egypt and a sharp fall in domestic stockpiles.
Light, sweet crude for August delivery rose $1.64, or 1.7%, to $101.24 a barrel on the New York Mercantile Exchange, the highest settlement since May 3, 2012. ICE North Sea Brent crude oil for August delivery was recently $1.79 higher at $105.79 a barrel.
"Crude oil got its first boost from fears of the spread of unrest in Egypt. It got its second boost from the friendly weekly inventory report...It caught people a little bit off guard," said Phyllis Nystrom, energy analyst at CHS Hedging.

The amount of oil in storage in the U.S. fell by 10.3 million barrels to 383.8 million barrels for the week ended June 28, the U.S. Energy Information Administration said. It was the biggest weekly drop in U.S. stockpiles since the week ended Dec. 28 and was more than the 2.3-million-barrel decline analysts had expected.

Stockpiles in the Gulf Coast region saw the biggest drain, down 3.2% from the previous week.
"We've got the refining industry really back up and running, turning this crude-oil surplus that we've seen back into refined products," said Andy Lipow, president of Houston consulting firm Lipow Oil Associates. "We're in the peak summer driving season, so [demand] is going to be at the highest level we've seen this year."
Refineries turn crude oil into gasoline and other products. They ramp up production at this time of year to prepare for increased demand as Americans travel during the summer. Refineries were running at 92.2% capacity last week, up from 90.2% the previous week.
Analysts also said stockpiles were lower because of supply disruptions in Canada, curbing imports. Pipeline operator Enbridge Inc. (ENB) shut down three oil pipelines in Canada last week after detecting a leak in one.
Oil prices also got a boost from political tensions in Egypt that increased concerns about supplies from the Middle East.
"All eyes are on Egypt. There is fear of more instability in an already unstable region," said Andy Lebow, senior vice president of energy futures at Jefferies Bache.
Egyptians have taken to the streets in recent days to participate in mass demonstrations demanding the resignation of President Mohammed Morsi. A deadline set by the Egyptian army for Mr. Morsi to resign expired Wednesday. Mr. Morsi refused to step down and proposed a consensus government as a way out of the country's crisis.
Although Egypt isn't a major crude producer, its control of the Suez Canal and its proximity to large oil exporters such as Saudi Arabia make investors uneasy whenever there is political unrest in the country.
Front-month August reformulated gasoline blendstock, or RBOB, settled 5.49 cents higher at $ 2.8382 a gallon. August heating oil settled 4.98 cents higher at $2.9512 a gallon.
More information on settlements and highs and lows for futures on Nymex and ICE platforms can be found by searching for the following headlines:

   Nymex Light Crude Oil Close 
   Nymex Harbor RBOB Gasoline Close 
   Nymex Heating Oil Close 
   ICE Brent Crude Oil Close 
   ICE Gas Oil Close 

Source 

US crude oil supplies grew by 300,000 barrels

The nation's crude oil supplies were unchanged last week, the government said Wednesday.
Crude supplies stayed at 394.1 million barrels, which is 1.8 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
Analysts expected a decrease of 2 million barrels for the week ended June 21, according to Platts, the energy information arm of McGraw-Hill Cos.
Gasoline supplies grew by 3.7 million barrels, or 1.6 percent, to 225.4 million barrels. That's 10 percent above year-ago levels. Analysts expected gasoline supplies to rise by 1 million barrels.
Demand for gasoline over the four weeks ended June 21 was 0.3 percent lower than a year earlier, averaging 8.8 million barrels a day.
U.S. refineries ran at 90.2 percent of total capacity on average, up 0.9 percentage point from the prior week. Analysts expected capacity to rise to 89.7 percent.
Supplies of distillate fuel, which include diesel and heating oil, rose by 1.6 million barrels to 123.2 million barrels. Analysts expected distillate stocks to grow by 1 million barrels.

Benchmark crude futures fell by 95 cents to $94.37 a barrel in New York.

Shell Expects Energy Demand To Double Over Next 50 Years

KUALA LUMPUR, July 3 (Bernama) -- Global oil and gas company, Shell, expects energy demand to double over the next 50 years, with the global population heading towards 9.5 billion mark by 2060 and emerging economies lifting millions of people out of poverty.

Shell International Chief Political Analyst Dr Choo-Oon Khong said the scenario highlighted the need for business and government to find new ways to collaborate, foster policies that promote the development and use of cleaner energy and improve energy efficiency.

"This scenario shows how the choices made by the government, business and individuals in the next few years will have a major impact on the way the future unfolds," he told a media briefing on Shell's New Lens Scenarios Report here Wednesday.

The report, which explored two possible ways the 21st century could unfold, described the scenarios as "Mountains" and "Oceans".