Industry Manufacturing
November 10, 2020 No Comments

Oil price slump threatens Nigeria’s 2021 budget – FG

The Minister of Finance, Budget and National Planning, Zainab Ahmed, has said the resurgence of COVID-19 in Europe, which has caused oil prices to decline in the international market, may affect the 2021 budget estimate.

The 2021 budget is predicated on $40 per barrel but the current price in the market stands at $37.

Ahmed made the statement on Thursday when she appeared before the Senate Committee on Finance to defend her ministry’s budget.

The chairman of the panel, Senator Adeola Olamilekan (APC, Lagos) had asked the minister about the contingency plans the federal government has put in place to insulate the budget from the shocks of falling oil price.

“The actual projection was $40 per barrel and that is the average price that we projected for the year. Some of the institutions that are responsible for tracking the price of crude oil, actually have crude oil prices going as far as $50, $52 per barrel.

“We took the safer path. It seems the second wave of COVID-19 in Europe is affecting us. We are hoping to have clarity as to which direction to take in the next week or two,” she stated.

The minister, however, dismissed insinuations that the federal government may increase Value Added Tax (VAT) again by 2.5% in 2021.

“As for the finance bill, we have the draft. There will be no increase in VAT or any form of taxes because we see 2021 as a year of recovery.”

When they appeared to defend their budgets, almost all the heads of the agencies under the committee’s supervision lamented that their budgetary allocations were too meagre to meet their obligations.

The Accountant General of the Federation, Ahmed Idris, said his agency has 37 offices in dire need of rehabilitation. But the finance minister said the budget office could not go beyond available resources.

“Everybody is claiming scarce resources, but we can’t go beyond what is available,” the minister said.

The Director General, Budget Office, Ben Akabueze, said until the federal government gets more revenue, no agency of government would get enough allocation.

Source: Daily Trust

Manufacturing Production
October 20, 2020 No Comments

Seplat looking to award key engineering contract for its Sapele field

Nigerian independent Seplat Petroleum has released details of a front-end engineering and design (FEED) contract it plans to award for oil capacity expansion work at its Sapele field according to Upstream.

A  recent tender noted that as part of the Sapele Further Oil Development (FOD) campaign, Seplat on behalf of the joint venture of itself and the Nigerian Petroleum Development Company Limited (NPDC) has deemed it necessary to carry out the FEED of the Integrated Liquid Treatment Facility and Flowstation at its Sapele Field to handle the anticipated increase in production from OML 41.

To execute this FEED scope, it is mandatory that a competent engineering contractor with proven experience in Liquid Treatment Facility (LTF), Produced Water Treatment (PWT), and Sand Management Systems (SMS) Engineering Design in line with SEPLAT’s Produced Water Management strategy is engaged.

The successful contractor shall demonstrate capability in the engineering of PWT and SMS, and by leveraging its experience in conjunction with a reputable Original Equipment Manufacturer (OEM) to provide a detailed technical proposal for PWT and SMS to be deployed as part of the Sapele FOD Liquid Treatment Facility Project. The tendering process shall be run on the Nigerian Petroleum Exchange (NipeX) contracting platform.

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Manufacturing Production
October 20, 2020 No Comments

Nigeria’s natural gas base price inches up in new PIB

The domestic base price, the price at which Nigerian gas producers are to sell to Power Plants, will be $3.2 per Million British Thermal Units (MMBtu), beginning from January 1, 2021, if the Petroleum Industry Bill (PIB) is passed into law in its current form.

But the price at which the gas-based industry, comprising companies which produce methanol, fertilizer (urea, ammonia), polypropylene, etc., will purchase natural gas, can be as low as $1.5 per MMbtu, the incoming law says. That price is special and it is calculated from a formula.

Gas users outside the power sector and the gas-based industry will pay at least $0.5 higher than $3.2 per MMbtu, and their cost of purchase will depend on negotiations with their suppliers.

The domestic base price -$3.2per MMBtu- which is specified in the third schedule of the bill, currently being debated at the Nigerian National Assembly, shall be increased every year by $ 0.05 per MMBtu until 2037, when a price of $ 4.00 per MMBtu will apply for that year and future years.

The Midstream and Downstream Regulatory Authority, “may, by regulations, change the domestic base price and the yearly increase) to reflect changed market conditions and supply frameworks”, says the bill, submitted two weeks ago by President Muhammadu Buhari.

“The objective is to establish a fully functioning free market in natural gas for domestic supplies. This is to be achieved through the voluntary supplies. Where insufficient voluntary supplies are occurring, the Authority may increase the domestic base price and, or the yearly increases. At the same time, the Authority shall monitor the gas prices in other major emerging countries and ensure that Nigeria continuous to have a price level for natural gas that is less than the average of these emerging countries in order to promote the non-oil sectors in the Nigerian economy”.

Timipre Sylva, Minister of State for Petroleum, had given hint of the gas pricing framework last August during a conversation with the Nigeran Association of Petroleum Exlorationists (NAPE). The bill, he explained, “will establish a gas base price that is higher than current levels (The current domestic base price is $2.5 er MMbtu) for producers and this base price will increase over time”.

Sylva said: “This price level should be sufficiently attractive to increase gas production significantly since this gas price will be comparable with gas prices in other emerging economies with considerable gas production.

“The price will be independent of all gas prices for LNG export and is therefore a stable basis for enhanced domestic gas development, regardless of international oil or energy development”.

 

Source: Africa Oil + Gas Report

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