Nigeria, South Africa Sign MOU to Boost Trade in Oil, Gas Sector

Nigeria and South Africa have signed a memorandum of understanding aimed at boosting the volume of oil and gas trade between the two countries, Diezani Alison-Madueke, Nigeria's oil minister, said Wednesday.

In a statement issued Wednesday by the Nigerian National Petroleum Corp., or NNPC, in Abuja, Ms. Alison-Madueke was quoted as saying on the sidelines of the Nigeria and South Africa Business Forum in Cape Town that the MOU would also "reinforce and strengthen the existing symbiotic relationship between the two largest economics in Africa."

Ms. Alison-Madueke is on the delegation of President Goodluck Jonathan who began a state visit to South Africa on Monday.

Nigeria, Africa's largest oil producer, has in the last six years unsuccessfully tried to pass in its National Assembly a bill meant to transform its inefficient and corruption-ridden oil and gas sector.

Oil thefts and pipeline vandalism are rising in the nation's oil-producing Niger Delta region while the uncertainty created in Nigeria's oil and gas sector due to the bill's failure to pass has compelled international oil companies to hold back further investments in the sector.

Ms. Alison-Madueke said the MOU on the oil and gas sector "is to basically help in the transfer of knowledge, skills, capabilities and technology."

She said when passed into law, oil bill would help to open the entire spectrum of the Nigerian oil industry to investors from all over the globe.

The bill is currently being debated in the National Assembly in Abuja where there is a sharp division among legislators from the southern and northern parts of the country on the provisions of bill and it is not clear when it will be passed into law.

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Nigeria Oil Bill Could Deter $109B if Investment

LONDON - Landmark legislation intended to reform Nigeria's oil sector is set to introduce harsh fiscal terms that could deter $109 billion worth of new investment in the coming years, according to Nigeria's oil industry trade body.

The bill, currently under discussion in Nigeria's parliament, would make Nigeria one of the harshest investment climates in the world for the oil industry, said Mark Ward, head of Exxon Mobil Corp.'s (XOM) Nigerian unit in a presentation given Tuesday and seen by Dow Jones Newswires.

Mr. Ward was speaking in his capacity as chairman of the Oil Producers' Trade Section of the Lagos Chamber of Commerce.

According to the presentation, the unfavorable fiscal terms would result in Nigeria's oil production hitting a plateau of about 3 million barrels a day around 2016, and then start to decline as $109 billion in planned new investment would no longer be economically feasible.

Members of Nigeria's oil ministry and National Assembly weren't immediately available to comment, however Oil Minister Alison Madueke said in a statement released Tuesday by the country's state oil company that proposed changes to the oil industry are designed to increase exploration and development activities by creating a more competitive environment.

Nigeria has long planned a thorough overhaul of its oil industry, encompassing everything from tax rates to environmental laws to the structure of the country's state-owned oil company, but the bill has stoked controversy and drawn strong criticism from the oil sector.

Uncertainty over the bill's passage has already taken its toll on the industry.

Last year, Nigeria's Department of Petroleum Resources said the country's recorded reserves had fallen to 36.5 billion barrels from 37 billion barrels in 2010 as a result of a slowdown in investment linked to uncertainty over the bill

Nigeria is West Africa's largest oil producer.

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Sources: Petrobras to Auction $5 Billion of Nigeria Oil Assets

Brazilian oil company Petrobras is to auction off its stakes in Nigerian oil fields to raise cash for domestic projects, a deal that may fetch up to $5 billion, sources close to the deal said.

The state-controlled company, formally known as Petroleo Brasileiro SA, has hired Standard Chartered to run the process, which will kick off in the next two months, banking and oil industry sources said.

Asian state oil companies are expected to bid in the hopes of adding more production assets to their portfolios. Private equity funds are also interested, banking sources said.

Standard Chartered and Petrobras declined comment.

The decision to sell the Nigeria assets marks a retreat away from foreign markets once considered strategic in favor of realizing the government's goal for Brazil to become self-sufficient in energy.

Petrobras will sell its 8 percent stake in the Nigerian offshore Agbami blocks, which are operated by U.S. energy major Chevron and its 20 percent share of the offshore Akpo project, operated by France's Total.

Crude oil production from the Agbami field fields began in 2008. Output from the project can reach 250,000 barrels per day (bpd), and it holds estimated reserves of 900 million barrels.

Akpo began production in 2009 and has plateau output of 175,000 bpd of light condensate oil and 9 million cubic meters of gas. It has proved and probable reserves of 620 million barrels of condensate and more than 28 billion cubic meters of gas, according to Total.

Petrobras began operations in Nigeria in 1998 in the deep waters off the coast of the Niger Delta.

Petrobras is divesting assets and redirecting investment towards higher-return activities such as exploration and production to finance a five-year, $237 billion capital spending plan, the world's largest corporate investment program.

Petrobras hopes to more than double current oil and gas production by the start of the next decade to about 5.2 million barrels of oil equivalent a day and also help Brazil become self-sufficient in refined products as well. 

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ENI Curbs Activities in Nigeria Due to Oil Theft

ROME - Italian energy company ENI SpA said on Saturday it has suspended its activities in Bayelsa state in southern Nigeria due to frequent thefts from pipelines.

"The decision was taken due to an intensification of bunkering activities, or sabotage of the pipelines," the company said in a statement.

ENI said it completely suspended all onshore activity at the Swamp Area site in Bayelsa during the night between Thursday and Friday.

The company said the theft of oil from the pipelines "had reached levels that were no longer sustainable recently both from the point of view of safety for people and for the damage caused to the environment by these activities."

The Italian oil major was producing between 35,000 and 40,000 barrels of oil equivalent per day at the site and the theft and losses due to sabotage had reached up to 60% of production.

Nigeria is Africa's biggest crude oil producer and most of the government's revenue is based on the sector. The populations of the Niger Delta, however, live mostly in poverty and the area is very polluted.

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Six Foreign Oil Workers Kidnapped Off Nigeria Are Free

LAGOS - Six foreigners kidnapped on February 17 by armed pirates from an oil service ship off Nigeria have been released unhurt without a ransom being paid, police told AFP on Tuesday.

"All the six foreign hostages (were) released Monday evening unhurt. No ransom was paid before their release," said the police commissioner in Bayelsa state, Kingsley Omire, referring to the Indian, Russian and Ukrainian hostages.

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Six Foreign Oil Workers Kidnapped in Nigeria

LAGOS (AFP) – Armed pirates who stormed an oil service ship in southern Nigeria have kidnapped six foreigners and demanded a $1.3 million ransom for their release, police told AFP.

"Three of those abducted are from Ukraine, two from India, one from Russia," Bayelsa state police spokesman Fidelis Odunna said of the Sunday attack.

"One of the kidnappers called to demand the sum of 200 million naira" ($1.3 million), he added.

The Armada Tuah vessel operated by the Lagos-based Century Group with a crew of 15 was attacked by gunmen in waters off Bayelsa, police said.

It was not immediately clear how far offshore the vessel was at the time of the attack, or whether it had in fact docked.

"We have deployed intelligence personnel in search of the six workers," Odunna said.

The kidnapping of foreign oil workers is common in Nigeria's oil-rich south, with the hostages often released following a ransom payment. It is however rare for police to discuss the details of ransom demands.

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Shell Gets Apparent Win in Nigeria Oil Spill Cases

LONDON - A court in the Netherlands Wednesday dismissed four claims for compensation against Royal Dutch Shell PLC's Nigerian subsidiary, but awarded damages in a fifth, in cases brought by farmers and fishermen claiming that oil spills from pipelines in Nigeria damaged their livelihoods.

The size of damages awarded has yet to be decided, but the ruling is an apparent victory for the oil giant. The court concluded that the oil spills weren't caused by poor maintenance by Shell's Nigerian subsidiary, but by sabotage from third parties.

Significantly, the court also dismissed all claims against the parent company, based in the Netherlands, saying that Nigerian law meant only Shell's local subsidiary was liable. This means the case doesn't set a legal precedent over how Dutch companies are held responsible for the actions of their foreign subsidiaries.

Oil companies will be relieved by the verdict, principally that a precedent of a general responsibility of the parent company to the subsidiary hasn't been established in relation to Nigeria, said Simon Tysoe, a partner at law firm Herbert Smith Freehills, who specializes in the energy and natural resources sector.

The ruling could also dissuade other people from bringing claims such as this in a European court, he added.

The lawsuit was brought by environmental group Friends of the Earth Netherlands and four Nigerian farmers and fishermen, who were seeking compensation over claims that oil spills from Shell pipelines in Nigeria damaged their livelihood. They also said they wanted the Anglo-Dutch oil company, based in The Hague, to complete the cleanup of the spills.

The court, which posted the verdict on its website, said that in the single case where Shell's Nigerian subsidiary was ordered to pay compensation, the company "could and should have prevented" the sabotage of its pipeline that caused the spill by installing a concrete plug on an abandoned oil well before 2006.

The sabotage was committed in 2006 and 2007 by opening the underground valves with a monkey wrench, the court said. Shell installed a concrete plug on the well in 2010.

Mutiu Sunmonu, the managing director of Shell Petroleum Development Company, Shell's subsidiary in Nigeria, welcomed the court's ruling that all spill cases were caused by criminal activity.

"Oil pollution is a problem in Nigeria, affecting the daily lives of people in the Niger Delta. However, the vast majority of oil pollution is caused by oil thieves and illegal refiners," Mr. Sunmonu said. "This causes major environmental and economic damage, and is the real tragedy of the Niger Delta."

Friends of the Earth Netherlands oil and mining campaigner Evert Hassink said the group would appeal the court's verdict in the four cases that were dismissed and would also appeal the ruling that the parent company wasn't responsible.

Mr. Hassink said that Shell had a duty of care to prevent sabotage of its pipelines. "An oil giant cannot leave 7,000 kilometers of pipeline and hundreds of installations unprotected and unguarded in a politically unstable and economically underdeveloped region," Friends of the Earth Netherlands said.

The oil spills at Oruma, Goi and Ikot Ada Udo in the Niger Delta took place between 2004 and 2007. The total amount of oil spilled in the three locations was about 1,100 barrels.

Shell had said previously that a joint investigation found that sabotage was the cause of the spills in each of the three spill locations. In the first case a hole had been bored into the pipeline, in the second it had been cut with a hacksaw and in the third a valve had been manually opened, the investigation found. The joint investigation team included members of the local community, local authorities and Shell.

Pipelines are commonly tapped in Nigeria to steal the oil inside. Many parts of the Niger Delta have a thriving trade in oil stolen this way, known locally as "bunkering." A report by the United Nations Office on Drugs and Crime in 2009 estimated as much as 150,000 barrels of oil a day was being stolen in that manner.

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Nigeria Exxon spill spreads for miles along coast

By Tife Owolabi. Reuters

IBENO, Nigeria | Sun Nov 18, 2012 2:51am EST

(Reuters) – An oil spill at an ExxonMobil facility offshore from the Niger Delta has spread at least 20 miles from its source, coating waters used by fishermen in a film of sludge.

A Reuters reporter visiting several parts of Akwa Ibom state saw a rainbow-tinted oil slick stretching for 20 miles from a pipeline that Exxon had shut down because of a leak a week ago. Locals scooped it into jerry cans.

Mark Ward, the managing director of ExxonMobil’s local unit, said a clean up had been mobilized, and he apologized to affected communities for the spill.

Exxon said last Sunday it had shut a pipeline off the coast of Akwa Ibom state after an oil leak whose cause was unknown. Read the full article

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