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NNPC projects $1tn loss in global oil production by December

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The Nigerian National Petroleum Corporation has estimated global losses from exploration and production activities due to slowing demand for crude oil amid the COVID-19 pandemic will hit about $1 trillion by the end of 2020.

Group Managing Director of the corporation, Mallam Mele Kyari, who stated this on Tuesday at the Nigerian Association of Petroleum Explorationists (NAPE) 2020 Conference, also reiterated the plan of the NNPC to reduce production cost per barrel to $10 by 2021.

The theme of the conference held in Lagos was “Accelerating Growth in Nigeria’s Hydrocarbon Reserves: Emerging Concepts, Challenges and Opportunities.”

He said the NNPC had slashed its cost per unit to between 20 per cent and 30 per cent and would reach the projected target next year.

He said, “We are in challenging times. What COVID-19 did to the oil industry is monumental. It has done a lot of collateral damage to the rest of the industry, entertainment and everything you can think off.

“Of course, the collateral cost to the industry we expect is about $1tn of loss for E&P across the globe.

“There’s an extreme decline in demand for oil and of course other losses through the year which is fatal for the business.

“But businesses must adjust and do things differently. We have pulled down cost and increased revenue and we are focusing more on reducing cost and optimising costs where we are not able to cut costs.

“We are investing in gas because we have seen the resilience of gas and that has taught us that gas will be the future of transition fuel and a great player in the future scenario. We are a gas country with over 600tcf with proven reserves of 203 trillion CF. We have done very little on that. The PIB will be the solution to this.”

Kyari said the only way to survive the difficult situation was to cut or optimise production costs and increase revenue.

Vice President, Prof. Yemi Osinbajo, who also attended the event, said the Federal Government was targeting the growth of the country’s crude oil reserves, currently at about 36 billion barrels to 40 billion and achieve a daily production of three million barrels.

Kyari, in his virtual presentation from Abuja, explained that with over 203 trillion cubic feet of gas, the Petroleum Industry Bill (PIB) when passed into law, would unlock the huge potential in the country.

According to him, without a clear fiscal environment and incentives in place, no one will invest in the sector, adding that by the time the PIB is ready next year, there will be renewed vigour in the industry, especially on the gas side.

He stated that despite the conversations surrounding the extinction of hydrocarbons, crude oil will continue to be relevant in the next 20 to 40 years.

He added that only very efficient companies producing at cheapest cost and getting to the market early would survive.

Kyari expressed delight at the discovery of oil in the frontier basin, particularly in the Benue trough.

He said it would significantly change the dynamics of production in the country, including the expansion of the country’s reserves.

He said, “Times are tough but the opportunities are all there. As a company, we have a target in the upstream and we know that $10 is possible in the industry. A lot is going on in terms of sharing resources, reducing contracting circle etc. We have seen a cost reduction of 20 to 30 per cent and overall at the end of 2021, we will see the $10 unit production cost.

“There are areas where it’s being done for less than $10 and unless we do this, we will not be competitive. The advantage we have is the quality of oil we have and we are one of the most extreme area in terms of distribution, so we have to pull the cost down, otherwise, we will produce oil and not find anyone to buy because you cannot cover the cost ultimately.”

Osinbajo, represented by the Minister of State, Petroleum, Chief Timipre Sylva, explained that though renewable energy remained the future of energy transition, hydrocarbons would remain the dominant source of energy in the immediate future.

He expressed optimism that a single-digit unit cost of production was achievable, provided the entire industry could work together to achieve the set target.

He said, “There’s no gainsaying that the growth of some countries depends on energy availability and utilisation, especially on crude oil and increasingly on natural gas.

“Renewable energy is becoming a cheaper form of energy and response to climate and reduced dependence on hydrocarbons over the next century seems to be inevitable. That notwithstanding, technology and discussions to date suggest that hydrocarbons will remain the dominant source of energy in the immediate future.

“The increased level of uncertainty in oil and gas demand and the emerging technologies on alternative energy have become important elements in making decisions on optimal exploitation of petroleum resources.

“This is more critical now that abundance of hydrocarbons is being discovered in the most unconventional places of the world. I suggest that our discussion should include but not limited to provision of secure energy supplies.”

The vice president stated that the OPEC production curtailments had resulted in lower revenue for the government, adding that it is now imperative for Nigeria to achieve a single-digit cost of production.

“Another key mandate is the growth of the country’s reserves to 40 billion barrels of crude oil as well as the production capacity of three million barrels of crude oil per day. We are fully committed to this mandate, notwithstanding the curtailment.

“We have the assurance that the curtailment will soon be over as the world economy improves. To grow our reserves, we have proposed fiscal incentives that will attract investments in the PIB,” he stated.

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Buhari to present 2023 budget proposal to NASS Friday

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President Muhammadu Buhari will present the 2023 Appropriations bill to a joint session of the National Assembly on Friday.

The appropriations bill will contain budget proposals for the 2023 fiscal year.

He made this known in a letter to the Senate President, Ahmad Lawan, which was read out at the start of plenary on Tuesday.

The formal budget presentation is scheduled for 10am

and it will be the last main budget Buhari will be presenting as he will leave office on 29 May 2023 when his second four year term will end.

The Federal Government is already proposing an aggregate expenditure of N19.76 trillion for the 2023 fiscal year with a budget deficit of about N12.41 trillion.

Some key assumptions in the proposal include an estimated oil benchmark of $70, crude oil production put at 1.69mbpd, exchange rate of N435.57/$ and inflation rate at 17.16 per cent.

The Federal Government pegged growth rate at 3.75 per cent because it believes that “Growth is expected to be moderated to 3.30% in 2024 before picking up to 3.46% in 2025.”

The Minister of Finance, Zainab Ahmed, had disclosed that the federal government will borrow over N11 trillion and sell national assets to finance the budget deficit in 2023.

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ASUU also corrupt, undermining govt investment – Buhari

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President Muhammadu Buhari has said a number of the Academic Staff Union of Universities (ASUU) are involved in corrupt practices.

He said the corruption in the universities and other institutions was undermining government’s funding and investment in education.

ASUU has been on strike since February 14 over increase in lecturers’ allowances and salaries as well as improved funding for the universities.

Buhari has appealed to the union to call off the strike but the lecturers have stood their ground.

The President on Tuesday while declaring open the Fourth National Summit on Diminishing Corruption organised by the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Office of Secretary to Government of the Federation (OSGF) and Joint Admission and Matriculation Board (JAMB), said ASUU was no less complicit in the corruption in tertiary education.

He said corruption in the education sector had continued to undermine investments, while critics downplayed funding by focusing only on budgetary allocations, urging a more comprehensive re-evaluation of expenditure.

The President said, “This year’s summit will mirror how corruption undermines educational policies, investments and create an unfriendly learning environment for our youths.

“Incessant strikes especially by unions in the tertiary education often imply that government is grossly underfunding education, but I must say that corruption in the education system from basic level to the tertiary level has been undermining our investment in the sector and those who go on prolonged strikes on flimsy reasons are no less complicit.

“The 1999 Constitution places a premium on education by placing it on the Concurrent List, thereby laying the responsibilities of budgeting and underwriting qualitative education on both the Federal and State Governments.

“The total education budget for each year is therefore a reflection of both federal and state budgets and should be viewed as other financial commitments in their totality.

“The allocation to education in the federal budget should not be considered via allocation to the Federal Ministry of Education and also academic institutions alone, but should include allocation to the Universal Basic Education, transfers to TETFUND and refund from the Education Tax Pool Account to TETFUND.

“Corruption in the expenditure of internally generated revenue of tertiary institutions is a matter that has strangely not received the attention of stakeholders in tertiary education, including unions.

“I call on stakeholders to demand accountability in the administration of academic institutions and for unions to interrogate the bloated personnel and recurrent expenditure of their institutions. Let me also implore the Unions to work with the government to put faces and identities to names on the payroll.

“Due to declining resources, the government cannot bear the cost of funding education alone. I task our academics to attract endowments, research and other grants to universities, polytechnics and colleges of education similar to what obtains in other countries.”

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Seven police officers dismissed, 10 others demoted

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The Police Service Commission (PSC), on Tuesday, dismissed seven senior police officers over gross misconduct.

The commission also announced the demotion of 10 other officers through reduction in rank.

These decisions were taken during the continuation of the 15th plenary meeting of the commission.

The meeting is expected to end on Thursday, October 6, 2022, according to a report by The Trust.

Presided over by its acting chairman, Justice Clara Ogunbiyi, the meeting considered all the Pending Disciplinary Matters (PDM) before the commission.

The PDMs, which totalled 47, also treated some appeals from dismissed police officers.

Addressing newsmen shortly after the meeting in Abuja, the spokesman for the commission, Ikechukwu Ani, said, the dismissed officers include one CSP, one SP and five ASPs.

He said that one SP was retired in public interest, adding that the commission reduced the ranks of one CSP to SP, three SPs to DSP, and two DSPs to ASPs.

The commission further reduced the ranks of four ASPs to Inspectors.

10 senior police officers, including an ACP, a CSP, a SP and two DSPs were given the punishment of severe reprimand.

Five ASPs were also awarded the punishment of severe reprimand.

Thirteen officers received the punishment of reprimand; two are to receive letters of warning while four officers were exonerated.

Ani quoted Justice Ogunbiyi as saying the commission would henceforth give the desired attention to Pending Disciplinary Matters so that those found guilty are punished immediately while those found not guilty are cleared to continue with their career progression.

Justice Ogunbiyi called on police officers to ensure they operate within established rules and avoid taking laws into their hands.

The commission, she said, would continue to work to sustain a professional police force.

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