06 Jul

Daily Watch – National gas policy debuts, Addax pays Switzerland over Nigeria sins

  • The FEC has approved a national gas policy that aims to reduce the country’s dependence on crude oil by increasing gas exploration and facilities, the oil ministry said in a statement. The policy was passed in last week’s cabinet session but only made public on Wednesday. Nigeria has the world’s ninth largest proven gas reserves, at 187 trillion cubic feet. A move to using gas could reduce the drain on foreign exchange that importing refined oil products requires. If coupled with infrastructure investment, Nigeria could also improve its creaking power grid, which forces many with no power or those plagued by frequent blackouts to operate costly generators. The 100-page National Gas Policy seeks to set up a single independent petroleum regulator. It also aims to separate upstream from midstream operations and to separate gas infrastructure ownership and operations from gas trading, the oil ministry said. The policy will also divide the Nigeria Gas Company into separate transport and gas marketing companies and introduce “market-led wholesale gas pricing” after a transitional period.
  • NNPC says it has signed a deal with Schlumberger to provide $700 million for the development of two oil fields. The Anyala and Madu fields, estimated to have reserves of 193 million barrels of crude and 800 billion standard cubic feet of gas, will pump 50,000 barrels of oil and 120 million standard cubic feet of gas daily on completion of field development in early 2019. “Under the agreement, Schlumberger will contribute the required services in kind and capital for the project development until first oil,” the US company said in a statement. The offshore fields, also known as oil mining leases 83 and 85, are owned 60 percent by NNPC and 40 percent by Lagos-based First Exploration & Production, which is also the operator of the joint venture. “Apart from providing funding for the development of the fields, Schlumberger would also provide other oil-field services on a limited exclusive basis,” NNPC said.
  • Guinness Nigeria on Tuesday launched a share sale to raise ₦39.7 billion ($126 million) from existing shareholders to help lower its financing costs after reporting its first annual loss in 30 years last year. The beer maker, the Nigerian division of the world’s leading spirit maker Diageo, said funds raised will support Guinness in executing its strategy in the face of recession. Guinness plans to issue five new shares to existing shareholders for every 11 held at ₦58 each, a 10.2 percent discount to Tuesday’s market price of ₦64.57. “Our expectation is that funds raised will help mitigate the impact of increasing finance costs, optimise our balance sheet and improve the company’s financial flexibility,” CEO, Peter Ndegwa, said. The company, which is 54 percent owned by Diageo, reported in September last year a pretax loss of ₦2.35 billion for the year ended June 30, its first annual loss in 30 years, triggering the share sale. Shareholders approved the sale in January. It said it had also received the green light from the SEC and the NSE.
  • Citibank has granted a ₦500 million loan to Accion Microfinance Bank as part of efforts to promote Nigerian microfinance. Lola Oyeka, Citi’s Country Public Affairs Officer for Nigeria and Ghana made the announcement in a statement. According to her, the grant will fund Accion’s loan portfolio and support the development of approximately 5,000 micro and small enterprises in the country. She also said the loan agreement would support the CBN’s National Financial Inclusion Strategy. With the loan, the bank aims to reduce the number of excluded population by bringing them into the orbit of formal banking. She further stated that the loan was part of a long-term business partnership between Citi Inclusive Finance, Citi’s specialised unit for microfinance and inclusive finance transactions, the Overseas Private Investment Corporation, and the United States government’s development finance institution. According to the 2012 Enhancing Financing Innovation and Access report, about 39.7 percent or 34.9 million adult Nigerians were excluded from financial services.
  • Addax Petroleum has agreed to pay 31 million Swiss francs ($32 million) to settle charges of suspected bribery of foreign officials, the Geneva prosecutor’s office said on Wednesday. Prosecutors for the Swiss canton of Geneva investigated the company, whose chief executive officer and legal director were also charged over several tens of millions of dollars in payments to a company and several lawyers in Nigeria. A four-month investigation found the payments were not sufficiently documented and doubts remained on their legality, but no criminal intent was established, the Geneva prosecutor’s office said in a statement. It added that Addax acknowledged possible organisational shortcomings and had taken measures to improve internal anti-corruption procedures. With this settlement the cases against the CEO and legal director have also been closed, a spokesman for the prosecutor said. Addax was bought by China’s state-owned Sinopec, Asia’s largest oil refiner in 2009.