Tag: Oil and Gas

A total of N6.14 trillion is owed to Nigerian banks by oil and gas operators and power companies in Nigeria.  The debt rose to this amount in June, 2021, from N5.94tn at the end of 2020. This represents about 28% of the N21.89 trillion loans advanced to the private sector by the banks as of June 2021. The bulk of this loan, N5.32 trillion is owe by Oil and gas firms, while the rest, N823.28billion is owed by power firms. Further analysis of the indebtedness shows that the oil firms operating in the downstream, natural gas and crude oil refining subsectors owed N3.99 trillion, while those in the upstream and services subsectors owed N1.33 trillion. The greater part of the power sector loans, amounting to N482.30billion, is owed by power generation firms and independent power producers, while transmission and distribution firms owed banks N340.98billion.

In another angle, seventy-seven international and Nigerian oil and gas companies are currently owing the Nigerian government about $6.48 billion (over N2.6 trillion). The indebtedness comes from the companies’ failure to remit petroleum profit tax, company income tax, education tax, value-added tax, withholding tax, royalty, and concession on rentals. A breakdown of the figures shows that a total of $143.99 million is owed as petroleum profit taxes, $1.089 billion as company income taxes and $201.69 million as education tax, $18.46 million and $972,000 as Value Added Tax (VAT), $23.91 million and $997,000 as Withholding Tax, $4.357 billion as royalty oil, $292.44 million as royalty gas, while $270.187 million and $41.86 million were unremitted gas flare penalties and concession rentals, respectively.

In what seems like a big support to the clamour by host communities that oil and gas companies operating in the country should site their headquarters in their host communities, the senate has given its three committees on Petroleum Resources Upstream, Downstream Petroleum Sector and Gas the mandate to liaise with the Ministry of Petroleum Resources and the Presidential Implementation Committee on the Petroleum Industry Act (PIA), to facilitate the relocation of oil and gas companies operating in Nigeria to their various operational bases in host communities to ensure unhindered operations.

Sponsored by Senator Albert Bassey Akpan and 23 other Senators, the motion seeks to compel oil and gas companies operating in Nigeria to relocate to their host communities and operational bases in order to reduce the high cost of production militating against maximum revenue from crude oil and gas sales to the federation account. The senators noted that the issue of insecurity and militancy brandished as excuses has been addressed by the Petroleum Industry Act, 2021, which placed certain responsibilities on the security, peace and safety of oil and gas infrastructure on the host communities to safeguard and ensure peaceful coexistence between oil and gas companies and their host communities.

With the relocation to these areas, the workers will also relocate to these areas and as such the government of these areas will benefit from the revenue, that is payment of tax, within the localities that they are exploiting this oil and gas, because the workers will no longer claim that they are not resident in these areas.

The Organisation of Petroleum Exporting Countries (OPEC) said as part of the estimated $1.5tn that would be invested in the downstream sector of the oil and gas industry from this year till 2045, Nigeria and some other developing nations will get about $450bn worth of new refinery projects and expansion of existing units.

OPEC recognized that last year’s COVID-19 pandemic driven oil demand shock led to the closure of numerous refineries worldwide, and that the likelihood of further closures in the coming years is high. It therefore deemed it fit to bridge the supply gap so as to bring stability in the oil market. This will restore the losses suffered as a result of closure of many refineries during the COVID-19 pandemic and therefore contribute greatly to the post-pandemic economic recovery. OPEC expects about 6.9 million barrels per day of new refining capacity between 2021 to 2026, mostly in the Middle East, Asia-Pacific and Africa. It expecting Africa’s potential refining capacity to start increasing in 2022 at just below 0.4mb/d, before reaching just above 1mb/d in 2026. Additionally, OPEC is collaborating with 10 non-OPEC countries under the “Declaration of Cooperation” umbrella. 

The organisation had earlier mapped out a cumulative oil-related investment requirements amounting to $11.8tn in the 2021-2045 period, about 80 per cent, or $9.2tn of which will go into the upstream, while $1.5 and $1.1tn will be invested in the downstream and midstream, respectively.