10 May

Daily Watch – Shell evacuates production facility, FG stealthily deregulates downstream

  • Renewed militant activity has forced Royal Dutch Shell to evacuate most of its staff from its production facility, Eja OML 79. The Shell evacuation was carried out via helicopter over the weekend. Ninety-eight key personnel were airlifted from Eja OML 79, run by SPDC, where the production of 90,000 barrels of oil per day has been halted. A small group of staff was left on the platform to carry out skeletal operations. The staff and facility are offered protection by two gunboats belonging to the Military Joint Task-force. Close to Eja 79 is the Bonga Field, which has a larger production capacity and is operated by another Shell subsidiary, SNEPCO. Some staff had been evacuated from Bonga, while the wider security implications are being reviewed by the company.
  • Premium Times is reporting that the FG will, within the next few days, introduce policy changes that will kick-start the full deregulation of the downstream sector of the Nigerian petroleum industry. As a result, there will be a minimum of 27.17 percent rise in the price of petrol nationwide, with the product reaching about N110 per litre at NNPC-owned filling stations and higher at other independent outlets. Because of fears of a possible backlash, there will be no formal announcement of the policy. Industry sources familiar with the plan said government was on the verge of discreetly giving permission to petroleum products marketers to gradually adjust their pump prices as early as midweek to signal the formal take-off of deregulation in the country. The unnamed sources told the paper that the government resorted to this drastic decision to end the vicious cycle of fuel scarcity crises and avoid subsidy payments.
  • A drop in the volume of imports in the country has led to a decline in revenue generated in the first quarter of the year at seaports by Customs, and put its N1 trillion revenue target for the year at risk. At the Lagos seaports, a 21 percent drop in revenue was recorded in Q1 according to the Customs Area Controller, Willy Egbudin. Lagos generated N61.7 billion in Q1 of 2016 as against N74.71 billion generated in 2015. Egbudin blamed the drop in revenue to the general economic downturn, which had in turn affected the number of vessels calling at the sea ports. He said they were fewer bulk cargoes because importers had been denied access to foreign exchange. Stakeholders on their part attribute the drop in imports to the CBN’s monetary policies, including the restriction of access to the American dollar.