Oil reserves fall, threaten OPEC quota
NNPC’s management also urged the lawmakers to persuade the Federal Government not to relent in its efforts to ensure security in the Niger Delta region while the Petroleum Industry Bill (PIB) now before the National Assembly is passed.
The corporation said if the security situation in the Niger Delta deteriorates, it would lead to deferred production and revenue from oil resources could be adversely affected. “Due to the twin impact of low production and high technical cost, driven mainly by production deferred as a result of the Niger Delta crisis, government revenue is expected to be negatively impacted. At $60bpd, gross government revenue is currently projected at about $26.62 billion under the current Joint Venture (JV) and Production Sharing Contract (PSC) fiscal regime. Based on the proposed fiscal terms as captured in the draft PIB currently before the National Assembly, government revenue could increase to about $29.23 billion (about N1.8 trillion),” the NNPC said.
The Corporation further said that in 2010, it would make efforts to minimise the number of new oil and gas projects.
Emphasising the need to ensure peace in the Niger Delta, the corporation said: “Two issues are critical to protecting government revenues in 2010 and beyond. The first is the need to ensure peace that has already been achieved in the Niger Delta region holds. Government revenue could decline to about $6.9 billion if total JV and PSC production decline to about 1.575 million barrels per day and crude oil price declines to about $30bpd. This scenario, although very unlikely, will portend a serious situation for government, as government will barely recoup its cash call and domestic gas investments from JV operations.”
It continued: “On the flip side, government revenue could climb to about $62 billion if there is a significant reduction of militancy activities in the Niger Delta leading to attainment of our un-risked production target 2,506 MBOD (million barrels of oil daily) and crude oil price averages $100 bpd. Recall that since relative peace returned to the Niger Delta region, the country’s gross crude oil production has steadily climbed from below 1.8 million barrels per day at some point to almost 2.4 million barrels per day.”
The chairman of the House Committee on Petroleum Resources (Upstream), Bassey Otu, said the committee would be cautious in working on the budget so as to ensure growth of the oil industry.
“We have seen the budget and we have also taken note of the issues raised, particularly about the OPEC and I can assure you that we are going to do what is in the best interest of the nation,” he said.
Meanwhile, restoration of gas supply to some thermal stations in the last one week has pushed electricity generation available to Nigerians to 3,570 megawatts (mw) at the weekend. This is a major improvement over the 3,047mw lowest generation achieved early this month.
Grid data report, which shows the power generation and transmission update made available to The Guardian at the weekend by the Power Holding Company of Nigeria (PHCN) indicated that lack of gas supply from the Nigeria Gas Company (NGC) has contributed to this development but added that more power could be available to consumers if the gas supply level is increased by the gas firm.
Based on the grid data report, Egbin Thermal Station and AES both increased generation from 700mw to 900mw at the weekend with over 200mw idle capacity due to gas shortage.
Other details on the performance in generation showed that Kainji generates 458mw from six machines; Jebba, 327mw; Shiroro, 293mw; Delta, 222mw; Sapele, 54mw; ASCON, zero; Afam 1V, 50mw; Afam I, II, III, V, zero; Afam VI, 449mw; Okpai, 463mw; Geregu, 95mw; Omotosho, 72.6mw; Omoku 46.6mw; Olorunsogo, zero and Ibom Power, 18.4mw.
“There is significant improvement in power generation due to increase in gas supply to Egbin / AES, Delta and Omotosho and also restoration of gas supply to Sapele and Geregu”, the report stated.
However, in the area of transmission, the company experienced some challenges as Benin-Ajaokuta 330kv line 1 (B11) was out on fault and Benin-Ajaokuta 330kv line 2 (B12) was also opened at Ajaokuta end due to island operation of Geregu power plant.
The report also indicated that Ikeja West-Akangba 330kv line 1(W3L) was out on fault.
Minister of Power, Dr. Lanre Babalola, described the restoration of gas as a welcome development and urged the oil companies and NGC to increase the volume to the nation’s power plant so that electricity supply can be improved.
Babalola said he was committed to improving power supply to the country beyond the 6,000mw aspiration, stressing that the major hindrance had been lack of gas supply which, he noted, is a factor that is beyond the control of his ministry.
The minister noted that there are many idle generating units in most of the power stations because there is no gas to run the machines. For instance, he said Geregu Power Station in Kogi is capable of delivering 414mw but currently hampered by gas to generate less than 100mw.
The minister also cited Omotosho and Olorunsogo with over 300mw capacity each but said Omotosho could only generate 159mw, while Olorunsogo operates at zero level.
Babalola noted further that vandalism of gas facilities belonging to Chevron Nigeria Limited also has a limiting effect on the volume of gas being pumped into the Lagos-Escravos line. This line feeds gas into Egbin, Omotosho, Olorunsogo and some plants in the Delta.
The minister added that the government is tackling the issue of power supply from three major fronts: Improving a sustained generation by making sure that the integrity of the machines are given priority, maintaining and expanding the transmission lines with a view to enhancing power export on national grid and massive investment in distribution facilities, including transformers to be able to regularly deliver power to the final consumers.