Nigeria: 70 Percent of Onshore Oil Output Shut in, FG Resumes Payments to Militants

As the federal government resumed cash payments to militants in the Niger Delta, it was revealed on Tuesday that up to 70 per cent of oil and gas production from traditional onshore and shallow water terrain has been locked in due to the attacks on oil infrastructure in the region.

This was just as the Managing Director/CEO of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, warned that the crisis in the Niger Delta has interrupted major reforms in Nigeria's oil and gas industry, which were initiated a few years ago to increase oil and gas production for the attainment of 15,000MW of electricity and also boost economic development nationwide.

President Muhammadu Buhari's administration stopped the payments last February, resulting in militants accusing it of breaching the amnesty deal negotiated in 2009 with the federal government.

The BBC yesterday quoted the spokesman of the Amnesty Programme, Piriye Kiyaramo as saying that the payments, which include tuition for those studying abroad, had been made on Monday, but militants contacted by the BBC said they were yet to receive the money.

Kiyaramo later said a "hiccup" meant that the money was to be paid yesterday evening.

"We expect the amnesty allowance to be paid tonight to 30,000 youths involved in the amnesty programme. The Central Bank has released the money," he said.

Under the amnesty deal, each militant is entitled to N65,000 a month and job training.

Buhari had announced plans in this year's budget to reduce funding for the programme by 70 per cent amid allegations of widespread corruption.

At the same time, a new militant group, the Niger Delta Avengers (NDA), stepped up attacks on oil industry assets, causing a sharp fall in oil production and worsening the country's financial crisis.

While the Seplat boss said the real solution to the Niger Delta crisis was not yet in sight, the Chairman and Managing Director of Chevron Nigeria Limited, Mr. Clay Neff said transparency by all the stakeholders could resolve the security challenges in the oil-producing region.

Speaking yesterday in Lagos at the opening session of the 2016 Nigeria Annual International Conference and Exhibition (NAICE) of the Society of Petroleum Engineers (SPE), Avuru said that the crisis in the oil-producing region has locked in 70 per cent of oil and gas production from the traditional onshore and shallow water terrain.

Avuru, who said he was hopeful that oil and gas production would fire up by 2020, however added that he was not aware of any real solution to the Niger Delta crisis in the near future.

"A year ago, we were battling with the drop in crude oil prices. Today, we are battling with zero production; zero revenue and zero everything. For upwards of five to six months, some companies operating in Nigeria have not been producing.

"Some of us no longer check the oil price; it has become irrelevant. Oil price is only relevant when you produce," he explained.

Avuru said the oil and gas industry was undergoing a major transformation a couple of years ago to increase domestic consumption of gas from less than 300 million standard cubic feet per day (mmscf/d) to 3 billion cubic feet per day.

"We said this industry in Nigeria must move away from just being a primary revenue earner for the federal government to being an enabler for economic development.

"We had said that this industry will move away from domestic consumption of less than 300 mmscf/d of gas to consumption of 3 bcf per day and in the process, energise companies like Dangote to become net exporter of cement and fertiliser; in the process deliver 15,000MW of electricity and all its multiplier effects.

"That is the journey that the industry had started few years ago. This journey unfortunately today is being interrupted by forces that you and I have looked at how we can combat them.

"The crisis in the Niger Delta has taken a new turn that must worry all of us because when we don't produce, our companies are destroyed, jobs are destroyed, and the economy is destroyed.

"This whole transformation that I described is interrupted rudely. Unfortunately, I do not know if there is any real solution in the horizon," Avuru said.

The Seplat boss, whose company is listed on both the Nigerian and London Stock Exchanges, however, said he was hopeful that by 2020, the country's production of oil and gas would fire the economy.

Also speaking at the conference with the theme "Transparency in the Oil and Gas Business: An Imperative for Energy Security and Stability", Neff, who spoke on behalf of the Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, said transparency by all the stakeholders would solve the challenges of insecurity in the Niger Delta and the collapse of oil prices.

According to him, the industry and relevant agencies should share data and ensure effective collaboration.

"We believe that transparency can effectively tackle these challenges for the benefit of all the stakeholders," Neff added.

But as oil sector operators lamented the intractable crisis in the Niger Delta, the president again reiterated his administration's commitment to improve power supply in the country.

Speaking at a joint press briefing with the visiting President of Togo, Faure Gnassingbe, Buhari said giving Nigerians stable power remained a priority of his government.

The Togolese president was in Nigeria to inspect the ongoing refinery project being built by the Dangote Group in Lagos.

Buhari also noted that Republic of Benin was also having issues with power supply because it is dependent on Nigeria for electricity.

He said: "They say seeing is believing. You can see the efforts private investors are making. We are also building pipelines, but it is not as formidable as what Dangote is doing. We are improving on it.

"We also have the NLNG that is helping to liquefy the gas and then turn it into gas with modern technology.

"And if you will recall, I made mention to the President of Benin, we have power problems and Benin has power problems because they depend on us. But we are working very hard to stabilise the situation. The resources are available, the technology is available, so we are trying to stabilise the situation.

"If ‎we improve power which means our productivity can be competitive and God willing, we are going to achieve our objectives."

Buhari said both presidents also discussed the unfortunate incidents in South Sudan and Burundi.

"It is an agonising situation. Several citizens are living under primitive conditions. We hope at the AU meeting, we will be able to stabilise‎ the situation in South Sudan and Burundi with the efforts being made," he said.

The visiting Togolese president said he was impressed by Dangote Group's string of investments in Africa.

"I'm impressed by the investments by Dangote because we have been talking of socio-economic integration and promoting trade among African countries.

"If you want to promote trade, you have investors that are very competitive, this will contribute to reduce importation from non-African countries.

"I was told that the (Dangote refinery) gas pipeline that will be built will be buried under the sea‎ to make it safe. It means that if you want to promote a blue economy, our ocean needs to be very safe. We need security," he said.

Gnassingbe said he also came to Nigerian to invite Buhari to attend the maritime summit holding in Togo in October this year.

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