Oil and gas
Senate moves against importation of hazardous petroleum products, raises ad-hoc probe panel
The Senate has raised alarm over the persistent importation of hazardous petroleum products and the influx of substandard diesel into the Nigerian market, for which has launched an investigation into the matter.
The upper legislative chamber is also planning to review the Petroleum Industry Act (PIA), noting that Nigeria has yet to attract significant investment since the Act’s implementation, while substandard petroleum products continue to flood the market.
The red Chamber therefore raised an Ad-hoc committee to investigate the alleged importation of hazardous petroleum products and the dumping of substandard diesel in Nigeria.
The resolution on the probe was passed as a matter of urgent public importance, followed a motion by Sen. Asuquo Ekpenyong from Cross River State, on Wednesday.
During plenary which was presided over by the President of the Senate, Sen. Godswill Akpabio, the committee was given terms of reference to inlude, “Examinining the pre-shipment and pre-discharge standard test parameters, adopted by the Nigerian Midstream and Downstream Regulatory Authority, with a view to uncovering loopholes, if any, exploited to get toxic cargoes into the country.
“Determining the level of compliance of the NPCL’s Direct Sale and Direct Purchase (DSDP) arrangements in line with the provisions of the Petroleum Industry Act, including the extent of transparency and accountability in the scheme.
“Beam legislative searchlight on the activities of the Petroleum Equalisation Fund, including payments made to transporters in the last 10 years.
“Enquire from the NPCL the state/ status of the 22 Depots built by the NNPC to eliminate road distribution of petroleum products.
“Engage with stakeholders within the oil and gas industry with a view to identifying possible gaps in regulating and strengthening the surveillance and monitoring structures in place to enable Nigeria detect violations of best practice standards in the importation of products before they enter into domestic supply chains.
“Also engage with the NNPCL with a view to understanding the extent of its determination and timelines for the start-up of Government funded oil refineries.
“Investigate how institutions across the importation and distribution chain failed to conduct quality sampling, shipped in products without auditing, port validations by the Nigerian Customs Service; Department of Petroleum Resources (DPR); National Maritime Authority (NMA); and Standard Organisation of Nigeria (SON).”
The Senate gave the committee 21 days conduct the investigation and submit a report.
Ekpenyong, while moving his motion, recalled how on June 16, 2024, 12 diesel cargoes, reportedly conveying a total of 660kt of diesel was exported by refineries to offshore Lome, Togo, for further distribution to West African markets, mainly Nigeria.
He told the Senate that the quality of the said diesel was below the Nigerian standard in terms of flash and Sulphur levels.
Ekpenyong added, “However, in spite of the substandard nature of the diesel, it still finds its way into the Nigerian markets, as a track on Mt ‘Kallos’, which arrived Lome on the 16th of June, which immediately did ship-to-ship (STS) transfer to DV MT (Matric Triumph) and then proceeded to discharge into Matric Jetty in Warri on 21st June, 2024.
“Thereafter, another STS was made to DV MT ‘Matric Pride’, which then proceeded to discharge into Obat Oil terminal on 22nd June, 2024.”
The lawmaker further said the diesel was priced below fair market value, which constituted dumping on the World Trade Organisation (WTO) rules.
According to him, the rules stipulate that “countries are permitted to take measures to protect their local industries in the event of dumping.
“The WTO also recognises the impact of dumping on domestic industries, and therefore stipulates tariff regimes, such as anti-dumping duties and import restriction measures to ensure that domestic producers are not unfairly disadvantaged.”
Ekpenyong noted that even though the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had recently revised the standards of diesel importation into Nigeria in line with the Petroleum Industry Act, 2021, it was apparent that they were incapable of enforcing compliance with the standards.”
He deplored a situation where MDPRA persistently issued import licenses for diesel and jet, despite sufficient local production capacity.
The motion reads further, “Therefore, the best also option for protecting Nigerians and our local refineries against dumping is to place a total ban on the importation of diesel in so far as our local refineries can meet the Nigerian demands.
“The said ban on importation of diesel will be beneficial to the Nigerian petroleum Industry and indeed the entire nation, and as such, the MDPRA should cease to import licenses in order to address all concerns. However, if the situation is allowed to continue, local production will have no option than to stop the commissioning of gasoline units and shutdown refineries until the regulatory environment improves.
“This is against the backdrop that local production has been able to sell on 20kt of jet fuel in the last 3 months, relative to local demand of 180kt over the same period.
“Observes that the inability to inaugurate modular refineries as well as get existing refineries to be fully functional to discharge their functions to meet local demands for clean petroleum products, would make a Nigeria a dump site for dirty fuel.
“Concerned that importation of substandard diesel has both human and mechanical consequences, as toxic emissions from the diesel contribute to respiratory illnesses and other health issues as well as degrade engine life that would force consumers to deal with frequent vehicle and generator breakdowns with attendant higher maintenance costs.”
Speaking after the motion was passed, Akpabio observed that following the passage of the PIA, several local investors put their money in the oil and gas industry, but said they might be disappointed already, seeing that happenings in the industry didn’t encourage them.
He cited the case of the Dangote Group, which invested over $4billion to build a refinery in the country, but was being frustrated to a point of sourcing for crude outside the country
The Federal Government may see a significant rise in revenue, up to N6.99 trillion monthly, following an increase in oil production to 1.8 million barrels per day (bpd), according to the Nigerian National Petroleum Company Limited (NNPC Ltd.).
In collaboration with industry stakeholders, the NNPC has intensified efforts to boost crude oil output to meet the government’s production targets.
This increase is coming as the average price of Brent crude remained stable at around $81 per barrel, creating favorable conditions for substantial earnings. Calculations based on current production levels and exchange rates show that producing 1.8 million bpd at $81 per barrel could yield approximately $4.37 billion in monthly revenue, which translates to N6.99 trillion at an exchange rate of N1,600 per dollar.
NNPC’s Group Chief Executive Officer, Mele Kyari, announced the milestone during a recent Oil Production War Room meeting at NNPC headquarters in Abuja, attended by top officials, including Petroleum Resources Minister Heineken Lokpobiri. Kyari emphasized that the increased production aligns with the Federal Government’s 2024 budget projections and long-term economic goals.
Chief Production War Room Officer Lawal Musa highlighted that the collaboration between the NNPC, security agencies, and local communities had been crucial to achieving the 1.8 million bpd level. The goal is now set to reach 2 million bpd by the end of the year, a target the NNPC is optimistic about achieving given the current momentum and security improvements in oil-producing regions.
Minister Lokpobiri commended the NNPC for achieving this production feat, describing it as a “remarkable milestone.” He expressed confidence that NNPC Ltd could not only meet but exceed the two million bpd target, further enhancing Nigeria’s revenue prospects.
The Chairman of the NNPC Board, Chief Pius Akinyelure, reinforced the board’s commitment to furthering this progress, urging the management and staff to pursue even greater achievements in the oil and gas sector. Dr. Paul Bebenimibo, spokesperson for Tantita Security Services Nigeria Limited, one of the private security agencies involved, confirmed the peaceful and secure environment in the Niger Delta as key to the production surge, assuring that further measures are in place to sustain and even increase output.
The drive to reach two million bpd underscores NNPC’s dedication to stabilizing and expanding oil production, with significant implications for Nigeria’s fiscal health and overall economic stability.
Kogi State Governor Ahmed Usman Ododo has called for enhanced cooperation between the state and the federal government to accelerate investment in oil exploration within Kogi State.
Governor Ododo made this appeal during a visit to Senator Heineken Lokpobiri, the Minister of State for Petroleum Resources (Oil), in Abuja on Thursday.
Special Adviser on Media to the Governor, Ismaila Isah quoted him to have reiterated his administration’s commitment to creating a favorable environment for investors, emphasizing the state’s readiness to work closely with the federal government.
He underscored the importance of fast-tracking oil exploration in Kogi in line with President Bola Ahmed Tinubu’s vision to expand exploration in Nigeria’s frontier basins.
Responding to the governor’s call, Senator Lokpobiri reaffirmed Kogi’s status as an oil-producing state and pledged the federal government’s commitment to attract investment to tap into the state’s vast oil resources. He highlighted the mandate of the Petroleum Industry Act (PIA), which tasks the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) with exploring frontier basins.
He assured that the government is ready to deploy funds for further exploration in Kogi.
Senator Lokpobiri also commended Governor Ododo for his leadership and strides in governance, noting that these efforts will be key in attracting and sustaining investment in the state.
Kogi State became the first oil-producing state in Northern Nigeria in 2022 following the federal government’s confirmation of oil discoveries in commercial quantities.
As the newly appointed chairman of the Senate Committee on Petroleum Downstream, Senator Sumaila Kawu has promised to tackle the persistent lack of transparency in Nigeria’s petroleum industry, which he likens to a “cabal.”
Kawu was appointed as chairman of the Committee following the demise of Senator Ifeanyi Uba who represented Anambra South who held sway as the chairman of the committee
Speaking to newsmen on Wednesday at the National Assembly, Kawu detailed his plans to shed light on the sector’s operations and engage the public in meaningful dialogue.
With rising fuel prices impacting Nigerians daily, Kawu emphasized the urgent need for clarity and accountability within the industry. “Our first step will be to study the current situation and gather information from relevant agencies,” he stated.
He highlighted the importance of holding public hearings, which will allow citizens to voice their concerns and experiences directly.
Kawu’s committee will focus specifically on reviewing contracts awarded by previous administrations and overseeing the current contracts for refinery repairs.
By scrutinizing the agreements, Kawu targets to expose any irregularities and ensure that funds are being used effectively.
He remarked, “We need to ask the hard questions and hold a public hearing to allow Nigerians to express their views.”
In his commitment to transparency, Kawu detailed his plans to engage with stakeholders, including the Nigerian National Petroleum Corporation (NNPC) and refinery operators, to understand the barriers to efficient production and accountability.
According to him, the recent visits to the refineries have given course fir concerns about unmet production timelines, prompting a call for a more rigorous evaluation of the situation.
Kawu’s focus on transparency is not only about identifying issues but also about fostering a culture of openness within the sector.
He promise to use the committee to dismantle the “cabal-like” operations that have characterized the industry, ensuring that decision-making processes are accessible and understandable to the public.
Senator Kawu expressed determination to implement measures that will stabilize the petroleum sector and address the legitimate concerns of Nigerians.
By prioritizing transparency and public engagement, he expressed the hope to restore confidence in the management of Nigeria’s petroleum resources.
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