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Mobil,
Shell Threaten To Shut Down Over Insecurity
As result of the incessant attacks on their facilities
and personnel, international oil companies (IOC)
operating in the Niger Delta region of Nigeria on
Tuesday, threatened to pull out of the country if their
security is not guaranteed.
Specifically, Mobil Oil Producing Company is threatening
to shut down production any moment from now should the
Federal Government refuse to beef up security.
Also, Shell Petroleum lamented that three of its gas
plants at Sogun, Otorogun and Obed have already been
shut due to insecurity, as they are not getting the
desired cooperation from the security agencies.
Manager, Government and Business Relations, Mobil,
Charles Ndiomu speaking at the House of Representatives
business dialogue series, organized by Business Wise Ltd
and sponsored by Acorn Petroleum for oil, power and gas
sectors in Abuja said besides security, Mobil requires a
high pressure pipeline to deliver its products to the
market as it operates in the Eastern parts where
infrastructures have broken down completely.
Executive Director, Exploration & Production, Nigerian
National Petroleum Corporation (NNPC), Chris Ogiemwonyi
confirmed that the security setback has already reduced
gas supply to power stations, thus exacerbating the poor
power situation in the country.
Power supply in Nigeria is now far below 3,000megawatt.
According to representatives of the oil firms, security,
gas purchase agreement and the lack of infrastructure
were basically responsible for the low power situation.
However, while summarizing their experiences for the
Speaker of the House of Representatives, Dimeji Bankole,
the Chairman, House Committee on Gas, Ugo Ajuma said:
"Three plants are shutdown at Sogun, Otorogun and Obed
but Sogun has recorded about 100 bunkering points.
"The major issue is security. The oil companies are not
getting the desired cooperation from the security
agencies so Mobil is under the threat of shutting down
if nothing happens today and tomorrow."
However, Ogiemwonyi noted that the House of
Representative had in 2008 budget facilitated the
allocation of $15billion to the upstream instead of the
usual $8billion.
He said should the 2009 budget get similar financial
support from the lawmakers hopes abound that the nation
would generate the 6000 megawatts or 90 percent of the
power target.
On his part, Ajuma posited that Nigeria would invest
$5billion in upstream sector to meet the targeted 2
billion cubic standard feet of gas, although the major
challenge in the upstream remains the Nigerian content.
"To have 6,000 megawatts by next year, the Federal
Government is pursuing domestic gas availability. There
is a mixture between oil, gas and power, so we would
discuss freely the challenges between the Oil Companies
for the quantity of gas before them next year," said
Ajuma.
Despite the encumbrances security has posed to the gas
sector, Ogiemwonyi commended the Joint Venture
Companies, saying Shell had improved its supply.
He noted that Mobil and Shell were the current players
sustaining the country in terms of gas supply.
"Next year there will be a modest growth, NNPC will
contribute 100 million standards cubic. By the end of
this year, there would be 4,600 megawatts supply of
power. Most of the projects are down; by 2009 the
project on gas supply will be accomplished, although
security issue must be addressed. The gas supply is now
down to 100million standard cubic feet per day.
Furthermore, Ogiemwonyi sought the support of the
security agencies for better policing of the area,
saying, "if there could be better patrol by the
agencies, there would be prevention and gas will be
provided on daily basis but Soku is the major problem we
have.
"It has now been heavily infested by sea pirates/
militants and all the vessels now have to be escorted.
The support from the agencies is insufficient. Services
companies do support, although they have their own
challenges. If it continues, we may not be able to
supply gas to the stations. Indeed, closing the gap is
the basic issue. If we don't address the issue our
discussions are in jeopardy." He charged.
While responding to the growing insecurity in the oil
producing region, Chairman, House Committee on Upstream
Bassey Otu, said government released N400 billion for
security last year and wondered why the problem appear
to be overwhelming all solutions.
"We really need to know how to solve this problem. We
don't need hide and seek game. Let us know whom these
militants and bunkerers are. A lot of money has been
released, let us know them and to arrest them, we must
not continue to hide them, whether they are politicians
experts, I do not believe the Niger Delta people are the
sole problem, we must expose those behind all these
problems."
In a similar development, an Independent Power Plant
Licensee, Cyril Agbego noted that the Nigeria
Electricity Regulatory Commission's (NERC) failure to
implement the Power Purchase Agreement (PPA) has added
to the problems in the power sector.
However, the NERC Vice Chairman, Abdulraheem Ado said
the stakeholders need 15 to 20 years PPA even as it is
only 10 years that the law allows.
Ado said NERC would meet the stakeholders soon, adding
all problems concerning PPA would be sorted out as soon
as possible.
Earlier in opening remarks House Speaker, Dimeji Bankole
said "Our investigations also revealed that $13 billion
out of $16 billion (about N2 trillion) was spent on the
power sector without commensurate results. We also
discovered that in the last five years alone, over $24
billion (about N3 trillion) revenues collected by
Ministries, Departments and Agencies (MDAs) was not
remitted to the Federation Account as constitutionally
provided. Our preliminary report of investigative
activities on the NNPC, NDDC and the Transport sector
are still on-going."
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