Halliburton, Siemens’ cases not closed —FG

By Soni Daniel, Northern Region Editor
ABUJA — The Federal Government has said that it had not closed any criminal case being investigated in the country, technically raising the potential for some prominent Nigerians implicated in the legendary Siemens and Halliburton scandals to face trial.
The Attorney General of the Federation, Mr. Abubakar Malami, who made the disclosure in an interview with Vanguard in Abuja, also dismissed as untenable the notion that President Muhammadu Buhari was afraid of taking the Halliburton and Siemens cases because the key suspects were top military leaders. Malami was responding to enquiries about the claim that Buhari’s administration had jettisoned the probe into the Halliburton and Siemens corruption scandals, in which Nigeria lost billions of Naira to high-ranking Nigerians who held sway at the time.
Media reports yet to be dispelled by the administration had claimed that the government was afraid to confront the powerful beneficiaries of the scam which had landed other suspects in the United States, Germany and others in jail.
Nigeria is said to have lost over $182 million to the Halliburton corruption case alone.
Malami said Buhari was not a man who could be restrained by fear from doing what was right and in the overall best interest of Nigerians he had sworn to defend and protect from harm’s way.
The minister said those who had jumped to the erroneous conclusion that the major corruption scandals had been swept under the carpet should note that the present administration had zero tolerance for corruption and would, therefore, not close any criminal case.
Extraneous influences
Malami, however, said in tackling the corruption cases, the Federal Government would not be assuaged by what he called ‘extraneous influences’ or action by available prima facie evidence.
Malami said: “The idea of fear does not come in at all as far as this President is concerned in the fight against graft. Don’t forget that whatever Mr. President does is guided by the rule of law and available evidence.
“It must be noted, however, that no extraneous influence can influence our actions as we move to fight corruption in all its ramifications. To be noted also is the clear fact that no criminal case can be closed once the facts are handy regardless of who is involved.”
Buhari has come under criticism for not taking up the two major corruption scandals that predated the Jonathan era. The verbal attack arose out of the decision of Buhari’s administration to limit its probe of corrupt officials to the Jonathan administration.

Oil crash: Nigeria producing at $5 per barrel loss

By Clara Nwachukwu

LAGOS — As oil prices continue on the downward slide, Nigerian oil firms may be producing at up to $5/barrel loss, as average production costs for independent and marginal field producers is between $30 and $35/barrel.

Oil prices, yesterday, resumed their free fall, with Brent crude, similar to Nigeria’s sweet crude grade, falling 2.6 per cent to $31.34 a barrel following a 10 per cent rise on Friday, while U.S. oil shed 95 cents to $31.24.

To compound the producers’ woes, a significant proportion of what is produced is lost to oil thieves and pipeline vandals, which they insist are even more dangerous than the bearish run oil prices

Industry chiefs, who spoke exclusively with Vanguard on phone, argued that the turbulence in the international oil market deserves urgent attention.
Specifically, they insisted that the Federal Government needs to be talking with Nigerian producers very fast, if it must save indigenous companies from running aground and plunging the economy into deeper crisis than it is in already.

Impact on producers
Speaking on the impact of the oil crash on the producers, Chairman, Petroleum Technology Association of Nigeria, PETAN, Mr. Emeka Ene, said:

“Current price is below Nigeria’s average of between $30 and $35 per barrel. Most marginal field producers are producing above $30/barrel, and with pipeline vandalism activities, costs will shoot up by another $10/barrel, so oil production now is not sustainable.”

Ene, who spoke against the backdrop of oil crashing to 13-year lows of below $28/barrel last week, noted that the bearish run may soon fizzle out, whether shale or conventional oil is being produced at above $25/barrel. As such, the southward run is not favourable to any producer.

He also revealed that “a lot of Nigerian companies are out of work because they cannot compete with the multinationals, so government needs to have a serious talk with stakeholders in the industry.”

Oil theft, pipeline vandalism
Whether oil prices go bullish soon or not, other stakeholders feel that the benefits of the rise will be lost on Nigeria, if the government does not deal decisively with the twin incidence of pipeline vandalism and oil theft.

The President, Nigerian Association of Petroleum Explorationists, NAPE, Mr. Nosa Omorodion, maintained that “government needs to address the issue of oil theft and pipeline vandalism very fast because, even if price stabilises tomorrow or whenever, we will still not be able to reap the full benefits of that rise.”

He further argued that “oil theft and vandalism remain recurring and very worrisome because these issues are much bigger than oil slide, which is mostly driven by speculation, while these activities affect planning and are more cankerous than price slide. Operators are risking their assets including human resources to produce the oil, only to have it stolen thereafter.”

Against this backdrop, Omorodion, whose association is responsible for finding and producing oil, revealed that NAPE is planning a national seminar this month end to holistically address the issue of oil slide.

He said: “We are going to assess the length and breadth of the oil and gas industry because the price slide is not only affecting petroleum, but also other sectors of the economy.”

Apart from the impact on cost of production, the NAPE boss noted that “The current price is affecting so many things, as nobody is drilling for exploration now, and no one is thinking about fancy technology to boost production. Also, exploration will suffer as no company is exploring for new wells to grow reserves, and many small scale producers, which are mostly Nigerians, will shut down.”
Going forward

Currently, most producers, both OPEC and non-OPEC including the U.S., Saudi Arabia, Russia, Iraq and a host of others are producing at optimal capacities, which indicates that the downward glide may not let up soon. Also, some analysts have predicted that price may glide to below $20 or even $10/per barrel before rebounding.

Furthermore, with Iran’s oil also up in the market and expected to be ramped up systematically, compounded by the melt down in demand being fueled by the crisis in China, crude prices are facing more pressures. But producers recognise that the global economy is in need of some succour but differ on the best ways to go about it.

Noting that Nigerian service companies, who are the hardest hit by the crashing oil prices and provide about 650 value services across the industry, Ene insisted that Nigeria has the weapon in these companies to cushion the market turbulence but has not fully appreciated it.

According to him, “Nigeria has a thriving local oil industry, and if properly supported, can push down cost of production to $10 per barrel. About 10 to 15 years ago, industry cost was below $10 per barrel and nothing much had changed.

On his part, Omorodion believes that now is the time for oil companies to be at the most cost efficient by prioritising between wants and needs, while government becomes more fiscally disciplined and diversifying the economy.

But Ene argued that the solution is not in prescriptivism, like the majors calling for as much as 40 percent cuts in cost of services thereby killing off the companies, adding that government needs to identify and reduce unrealistic economic toll gates.

In his opinion, “The whole system is heated up, and cost of borrowing is very high. So far, conversation has been restricted to major operators and has not included the service companies driving operations in the industry.

“If we must produce oil at $10/barrel, government needs to be talking to Nigerian companies, who have invested in people and technology and are not repatriating their profits.”

Furthermore, he noted that a lot of the systemic costs being borne by indigenous firms contribute to the high cost of production, such as what he described as “Federal Government agents charging unrealistic charges like asking for $10million for permits need to be looked into.”