Saturday, May 15, 2010

Nigeria News Update: $23 Billion Oil Deal Signed With China

Nigeria and China sign $23bn deal for three refineries

Friday, 14 May 2010 12:24 UK

Nigeria is the world's eighth-largest oil exporter Nigeria's state-run oil firm NNPC and China State Construction Engineering Corporation (CSCEC) have signed a $23bn (£16bn; 18bn euros) deal.

The two will jointly seek financing and credits from Chinese authorities and banks to build three refineries and a fuel complex in Nigeria.

The project would add 750,000 barrels per day of extra refining capacity.

NNPC hopes the construction of new refineries will stem the flood of imported refined products into Nigeria.

'Deepen relationships'

Nigeria is the world's 12th-largest oil producer and the eighth-largest oil exporter.

But the country imports roughly 85% of its fuel needs because of the disrepair and mismanagement of its four state-owned refineries.

"We are about to deepen the existing technical and commercial relationships between China and Nigeria through the signing of a memorandum of understanding," said Shehu Ladan, head of NNPC.

The three refineries will be built in Bayelsa, Kogi and Lagos states, while a location has to be confirmed for the petrochemicals complex.

The Nigerian government has said that foreign companies must invest in developing Nigeria's infrastructure and economy first, before they can benefit from its oil and gas exports.

NNPC ends fuel imports in 10 years

By Bassey Udo
Nigeria Next
May 14, 2010 02:07AM

The Nigerian National Petroleum Corporation (NNPC) says it plans to stop the importation of petroleum products for domestic consumption in the next decade.

Shehu Ladan, the corporation’s Group Managing Director, who announced this yesterday in Abuja, said the NNPC is also planning to become a key player in international trading of petroleum products worldwide.

As part of effort to prosecute this twin agenda, Mr. Ladan unfolded plans to boost the country’s existing domestic petroleum refining capacity with an additional 750,000 barrels per day (bpd).

The NNPC boss was speaking at the formal signing of the memorandum of understanding (MOU) with a consortium of Chinese investors led by the China State Construction Engineering Corporation Limited (CSCEC) to source for funding for three Greenfield refineries and one petrochemical complex being proposed in the country.

The completion of these facilities, Ladan said, will save the country in excess of $10billion (about N1.5trillion) annually as a result of the elimination of imported refined petroleum products as well as additional $1billion (about N150billion) from the ban on importation of fertilizers and chemicals.

“These new plants are capable of generating direct and indirect employment for about 20,000 Nigerians over the construction and operations periods,” he said.

New refineries

The MOU provides an opportunity for the China Export & Credit Insurance Corporation (SINOSURE) and Chinese banks to provide contractor finance and supply credits of about 80 percent of the total value of the project, put at $28.5 billion (about N4.28trillion).

In addition, CSCEC, reputed to be the world’s sixth largest engineering and construction company is expected to provide engineering, procurement, construction (EPC) and operations expertise to NNPC towards the realization of the set objectives.

A Nigerian firm, Sunrise Consortium, will serve as the local content vehicle (LCV) in the partnership.

Though one of the refineries is build to be sited in Lekki Peninsula in Lagos state, studies were ongoing to determine the most suitable location for the others, while the petrochemical plant would be situated along the national ‘gas corridor’ adjacent to the Brass LNG plant in Bayelsa State to enable it leverage on the gas natural gas feedstock from there.

“Government would want to take full advantage of the dredging of the River Niger in the location of the refineries close to the Northern part of the country. The NNPC is not only going to build the refineries to meet local need, but also for export. One day, we will also build an export-oriented refinery in the country,” the NNPC boss explained.

Yu Zhende, CSCEC Vice President (Overseas operations), said the MOU signing has laid the foundation for the actualisation of the company’s aspiration to expand its presence on the African continent as well as consolidate its foothold in the Nigerian oil and gas industry.

Refineries: NNPC, Chinese Firm Sign $28.5bn Deal

Nigeria ThisDay
From Onyebuchi Ezigbo in Abuja, 05.14.2010

A major step in the nation’s quest for self reliance in petroleum and associated products production was taken yesterday when the Nigerian National Petroleum Corporation (NNPC) and China State Construction Engineering Corporation Limited (CSCEC) signed an agreement for the joint sourcing of funds for the construction of three Greenfield refineries and a petrochemical plant estimated to cost $28.5 billion.

Speaking at the signing ceremony in Abuja, Group Managing Director of NNPC Shehu Ladan said the three Greenfield refineries are to be located in Lekki in Lagos State, Brass in Bayelsa State and Lokoja in Kogi State, while the site for the petrochemical plant is yet to be decided.

Ladan said the corporation’s aim is to accelerate the construction of new refineries in the country to stem the flood of imported refined products, which according to him, is currently estimated at $10 billion annually.

Under the memorandum of understanding (MoU), the Chinese company is expected to source 80 per cent of the funding in form of contractor financing and supplier credits from the China Export and Credit Insurance Corporation (SINOSURE) and a consortium of Chinese banks, while NNPC would provide 20 per cent.

Ladan said the operational mode of the new refineries would be different from that of the existing ones, adding that government would have no shares or financial contribution to make in the construction and management of the plants as the entire project would be executed with loans sourced by NNPC and the Chinese firm.

In addition, the refineries are to be managed by CSCEC consortium upon completion until the full recovery of their loan used on the project.

He said on completion, the three Greenfield refineries would add about 750,000 barrels per day capacity to Nigeria’s refining infrastructure and position NNPC to engage profitably in the international trading of refined petroleum products.

In addition, he said the proposed petrochemical plant would source natural gas from what would be generated under the Nigerian Gas Master plan to produce polymers, solvents and particularly, gas-based fertilizers that are required to boost Nigeria’s agricultural production.

On what Nigerians stand to gain from the execution of the projects, the GMD said the new refineries with a combined capacity of 750,000 bpd would go a long way in helping to eliminate the reliance on imported petroleum products.

He said on completion of the hydrocarbon processing plants, Nigeria would save in excess of $10 billion annually from the elimination of imported refined petroleum products and an estimated $1 billion from the importation of fertilizers and chemicals.

“These new plants are capable of generating direct and indirect employment for an estimated 20,000 Nigerians covering the periods of construction and operations. Over the next decade, NNPC desires to eliminate completely, the current flood of imported petroleum products into Nigeria’s domestic consumption. In order to achieve this, an estimated 750,000bpd of additional refining capacity shall be required at home as well as international joint ventures with other refineries abroad,” he said.

Ladan said the execution of the refineries/petrochemical projects would run for a five-year period, with construction of the refinery in Lekki commencing this year.

Speaking further on the importance of the project deal, the NNPC boss said the planned building of the new refineries would gladden the hearts of members of the labour movements, who had been clamouring for the building of additional refineries in the country as a condition for supporting Federal Government’s deregulation policy in the downstream sector.

Vice-President of CSCEC Mr. Yu Zhende who signed on behalf of the company, pledged that the firm would do everything possible to fast-track the execution of the projects and would abide by the provisions of the Local Content Act in the construction of the plants.

Chief Executive Officer of Lenoil Group, the local content partner of the Chinese conglomerate Mr. Leno Adesanya said the company was part of initial effort to bring in the Chinese firm to partner NNPC in the execution of the refinery project.

He said Lenoil was leading other local consortium of companies which were being positioned to take part in the provision of engineering and procurement services needed for projects in conformity with the local content demands.

Over 50 militants go on shooting spree

National News May 15, 2010

By Akpokona OMAFUAIRE, Warri
Nigeria Vanguard

OVER fifty suspected armed militants in three speed boats stormed Oyangbene community of Burutu Local Government in Delta State in the early hours of yesterday, 14 May shooting sporadically and causing pandemonium, as residents fled their homes for safety yesterday.

The attackers in commando style left the community after about three hours later leaving a message saying“we will come back to wipe out Agip Oil company and the leadership of this community should our people handling the oil matters be dropped from office”.

This was confirmed to Vanguard in Warri by Mr. Monday Bamugha, Community Chairman from his hiding place. He called on the Delta State Government, security agencies and the Federal Government to come to their aid in order to avert total elimination of the community as threatened by the suspected militants.

Mr. Bamugha in a shaky voice narrated that “at about 12.30 am this morning, about fifty boys, I think are militants came in three speed boats, we started hearing gun shots and we took to our heels, we escaped for our dear lives, they burnt some houses and destroyed others, after about three hours they left”

“A woman who stays near the waterside told me later that the boys threatened that they will come back again to wipe out the community and the leaders if the people handling the community oil with Agip are dropped”, he added.

Asked whether there is a running battle in the community, Bamugha said “there is no trouble until now, Agip are coming to our community to work, some people have had contracts of clearing and other form of jobs but now we want others who have not been given contract to be considered but the first group said no”.

The community Chairman appealed to the Governor, Dr. Emmanuel Uduaghan to immediately wade into the matter with a view to investigating the threat as people are no longer safe there anymore, he also call on the Joint Task Force, JTF, to immediately come to their rescue as they cannot continue hiding.

Meanwhile, Mallam Yusuf Eregbene, National Coordinator, Coastal People’s Forum has called on any aggrieved persons in Oyangbene to sheath their sword and tow the part of dialogue instead of carrying out action capable of bringing the military back to Ijaw land and also not to rubbish the peace effort of Governor Uduaghan.

He advised the educated elites in the community against using their education to oppress their own people and warned youths not to yield themselves a ready tool in the hands of trouble makers.

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