With the cartel regarding the Oil and Gas Industry crisis, the Trade Union Congress, TUC, and formerly the PENGASSAN president.
Mr. Festus Osifo in an exclusive interview with journalists on 29th September, 2024 provided lots of clarity.
However, Festus Osifo alleged that Aligo Dangote, founder and president of Dangote Company, didn’t invest US20 billion dollars as a charity organization,; rather, most of the funds are borrowed. And there has been a rice war between the Nigerian government represented by Nigerian National Petroleum Company Limited, NNPCL, and Dangote because of this. Mr. Osifo said that Dangote, having a robust insight, built his industry and started discussing crude supply in the highly regulated Oil and Gas.
However, houses like ExxonMobil Oando and Cand Hevron that produce crude have a federal government allocation of about 60% for a Joint Venture, while the houses have about 40% at best.
They put money into producing crude and are at liberty to sell to the highest bidder. Literally, oil is found everywhere in the world, and these companies have been trading companies with low-key contracts for years, implying that they are locked in contract.
He specified that in 2020, ExonMobil locked down off-takers who would take all products with those people and signed contracts because they are all investors.
Here, you pay some premium, which affects the supply chain of crude from Dangote, but NNPCL will have their crude. Unfortunately, Dangote started discussing crude 5 years ago instead of 6months ago before production with no grudges. After a solution in crude oil refining, he went into Premium Motor Spirit, PMS, and pricing issues with NNPCL.
The premium negotiation with NNPCL didn’t yield positive result, so it became a problem. Dangote with right to pay back his loans, NNPCL wanted him to pay using spat- international price used in calculating PMS.
This means that in that spat cost, some people buy from the refinery without a premium. When it was bought by NNPCL, Dangote wanted to pay premium on top of that, but they told him to pay on spat and crude – that was another challenge. Mr. Osifo reiterated that on the NNPCL list spat price list is followed by premium of 42 Naira. So, what is being asked for will be more than 42 Naira which became a contractual issue with Dangote. NNPCL on disagreeing posed a challenge, but PMS is around N950 per litre and offered to marketers N700 now. This is because if they offer at N950, we will buy between N1,100 and N1,250 across filling stations. So, NNPCL buys at a cost and input some subsidies. This is why other marketers cannot buy from Dangote, but NNPCL. He emphasized on the way governors makes money through devaluation and exchanged rate within short periods.
Further, he encouraged investigative journalism. In February and April, TUC during our Press Conference advocated that a special exchange rate be distributed in the downstream oil and gas to freeze with N700. Nevertheless, government should float Naira at 100%. In China, Japan, Russia- manage their currency because when there is shortage in supply and constant demand, the price moves and that has been the problem we face till date. About the performance of the refineries, most of them are relatively old and moribund with massive dropped down on PENGASSAN members in Port Harcourt, Warri and Kaduna refineries.
Occasionally, we learnt that maintenance is ongoing, but nobody can ascertain when they will embark on operation, even the going concern opinions.
About EROTON- major player in the upstream segment of the Oil and Gas sector in Nigeria, and a share access company was taken over by NNPCL. These companies and local practical companies were bought over hitherto managed by the International Oil Companies, IOCs to extract oil till the well dries up.
He stated vividly that oil and gas is a highly capital intensive ventures. Also, with technical and financial partners all over the world ExonMobil brings billions of Naira business in Nigeria, and attracts funds over years have developed and credit worthiness unlike companies like EROTON which may find it difficult to partner with Bank of China, Bank of USA. So, this is another challenge due to the fact that it is capital intensive.
But, Nigerian Upstream Regulatory Commission, NUPRC allows you check capacity to fund projects, face development and manage crude. So, once you finish drilling, you can start producing.
According to journalists from BusinessDay Newspapers to proffer solutions on 45% stake, Mr. Osifo responded that government should reduce the stake to 49% and give out 51%.
Today in Natural Liquified Gas, government owned 49% because we need 51% to take decision. This is because decision is taking by majority shareholding. We are advocating that government should suggest 41% to energy security assurance. So, having shareholding, you won’t be able to take everything out. So, we must clamour for at least 55%.On the last increment, subsidy resurfacing and what necessitated it; the NNPCL template of N1,637 was used for conversation and applying N1,000, the PMS prices drastically reduced to 40%. So, the problem was the exchange rate. We have been advocating that upon conversation, and letting Nigerians or PENGASSAN to collectively be responsible.
Mr. Osifo explained further that NNPCL initially bought at 20% upon encouragement from Dangote and the TUC but unfortunately backed out due to some business exigencies that only 7% could afford because they needed a controlling decision. In the 2023 Summit, contract staffing, conditions, and well-being in the oil and gas industries were discussed.
Recommendations like why we work to take care of our basic needs and families were made. And, having spent over a year, improvements in terms of IOCs produces about 300,000 bpd of crude oil to government agencies, services and contracts to do the needful. We made them understand that devaluation should not affect workers since they are operating on USD.
For instance, we obliged them to convert some USD with N1,600 and pay workers, which led to several strikes. I am glad that our aim was successfully made, and our PENGASSAN members are happy.