Nigeria to Know Fate Tomorrow as UK Court Delivers Judgment on P&ID’s $11bn Suit

*Komolafe urges winners of gas flare commercialisation bids to hasten site devt 

*FG deploys tiny tankers for crude oil transportation

Ejiofor Alike in Lagos and Emmanuel Addeh in Abuja

The Business and Property Court in London will on October 23 (tomorrow) deliver judgment in a case between the Federal Government of Nigeria and Process & Industrial Developments (P&ID) Limited.

This is coming as the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Mr. Gbenga Komolafe, has urged the bid winners for the Nigerian Gas Flare Commercialisation Programme (NGFCP), to hasten site development.

Meanwhile, the federal government, alongside its partners has commenced the deployment of tiny tankers for the transportation of crude oil through the creeks of the Niger Delta, following a protracted inability to fix the often-vandalised pipelines in the region.
According to TheCable, the judgment in the P & ID suit will be delivered by Justice Robin Knowles.
P&ID had agreed with Nigeria in 2010 to build a gas processing plant in Calabar, Cross River State, but the company said the deal collapsed because the Nigerian government did not fulfill its end of the bargain.

Claiming Nigeria breached the terms of the contract, P&ID took a legal recourse and secured an arbitral award against the country.
On January 31, 2017, a tribunal ruled that Nigeria should pay P&ID $6.6 billion as damages, as well as pre-and post-judgment interest at seven per cent.
Following the judgment, Nigeria applied for an extension of time and relief from sanctions.
The application was granted by Ross Cranston, a judge of the Business and Property Courts of England and Wales, in September 2020, thereby returning the case to arbitration.

Nigeria had alleged that the gas deal was a scam conceived to defraud the country.
Lawyers representing the federal government told the court that P&ID officials paid bribes to secure the contract.
But P&ID denied the allegation and accused the Nigerian government of “false allegations and wild conspiracy theories”.

In a March trial at the court, Nigeria alleged that the contract was secured through dishonest means that included bribery and perjury and that the arbitration award, which has now risen to $11 billion because of interests, should be quashed.
In September, it was reported that representatives of P&ID were actively seeking negotiations with the federal government to reach an out-of-court settlement.

Komolafe Urges Winners for Gas Flare Commercialisation to Hasten Site Development

Meanwhile, the Chief Executive Officer of the NUPRC, Mr. Komolafe, has urged the bid winners for the NGFCP, to hasten site development.
Speaking in Abuja during the establishment of a ‘College of Awardees’ for bid winners of the NGFCP, Komolafe said the forum will leverage the collective experiences of the awardees.
A statement signed by the NUPRC Chief Executive said the forum would also help connect other stakeholders and critical support systems to preferred bidders/permit holders.
In addition, Komolafe explained that it would bring together world-class service providers, including technology providers/Original Equipment Manufacturers (OEMs), financiers, and multilateral agencies to foster optimal delivery of the flare commercialisation projects.
Speaking at the inaugural Post Award Forum of Awardees (PAFA) and inauguration of the NGFCP College of Awardees in Abuja, Komolafe restated the organisation’s belief that the move would also facilitate significant opportunities for partnerships and collaborations.
The forum was attended by NGFCP preferred bidders/awardees, government agencies and functionaries, international partners, and multilateral agencies.
Others included: Development partners and a network of the business community comprising investors, technology providers, financiers, and service providers.
Hosted from the live transmission centre at the NUPRC’s headquarters, the event, NUPRC said, had more than 200 participants from across the world.
Komolafe emphasised the need for the awardees to secure full title to the relevant flare sites by qualifying for the grant of permit to access the sites and progress project development towards the start of beneficial operations.
“We, therefore, encourage all interested entities to take advantage of the platform to network and close deals under a win-win value proposition,”  he added.
He hinted that the forum will be convened periodically, possibly twice a month in the first instance, or at the college’s desired frequency as the programme implementation unfolds.
“Please be informed that the federal government is focused on deepening our gas market and ensuring decarbonisation of upstream operations in line with Nigeria’s Energy Transition Plan (ETP).
“The NGFCP is a critical platform through which these mandates can be achieved, and your preferred bidders are integral to this journey to bring to fruition the agenda of the government,” he stressed.
He urged awardees to take advantage of the current global gas market realities and quickly bring the projects to operation.
“I urge you to hit the ground running in developing the awarded sites in line with sound engineering and industry best practices,” he noted.
He pledged that the commission would continue to provide a transparent, predictable, and enabling regulatory environment for operators in line with its technical and commercial statutory mandates to optimise the development and exploitation of the nation’s hydrocarbon resources.

FG Deploys Tiny Tankers for Crude Oil Transportation

In another development, the federal government, alongside its partners, has commenced the deployment of tiny tankers for the transportation of crude oil through the creeks of the Niger Delta, following a protracted inability to fix the often vandalised pipelines in the region.

Specifically, the fleet of small river-going tankers is expected to help boost the country’s Organisation of Petroleum Exporting Countries (OPEC) quota, which the country has failed to meet since the COVID-19 pandemic started easing in late 2020.
Bloomberg reported that Africa’s top producer, racing to lift output before OPEC decides new oil-production quotas, has now started using the unorthodox vessels to get a new grade of oil, Nembe Creek, up the Niger River Delta.

The crude is subsequently loaded onto an ocean-going ship that’s stationed off the nation’s coast, the report said.
It’s unclear if the new mode of moving crude was responsible for the marginal gains in crude oil production in September, wherein the country recorded production of 1.34 million barrels per as against the 1.74 million OPEC quota. It was Nigeria’s biggest output since January 2022.
However, despite September’s increase, a THISDAY report last week estimated that Nigeria’s total losses to underproduction were as high as $3.89 billion in the third quarter of 2023.

The figure followed an analysis of the monthly industry report recently released by the NUPRC for September.
The crude oil, which is now channelled through other means of transportation, was previously transported via the Nembe Creek Trunk Line (NCTL) to the Bonny terminal, which is operated by Shell.
That conduit, operated by Aiteo Group and previously running at about 150,000 barrels a day, has not piped crude oil to Bonny since February 2022, according to people with knowledge of the matter.

The switch in the mode of transportation of crude is seen as a new development, since the Nigerian National Petroleum Company Limited (NNPC), the federal government’s representative in all contracts, had in the past clashed with partners that insisted on deploying barges rather than using the problematic pipelines.
The new logistics setup uses a floating storage offloading vessel called Galilean 7, which is anchored near the Brass terminal, according to a terminal information sheet seen by the news organisation.

Shuttling Nembe Creek oil, which is owned by Nigeria and Aiteo, is a significantly more expensive method than by pipeline, but a better option than not producing at all.
The river’s depth limits the size of the ships that can sail up it, meaning about 24 individual deliveries are needed to get enough oil to fill a standard ocean-going ship.

A Shell spokesman declined to comment. Aiteo and NNPC didn’t immediately respond to requests for comment.
A 1-million-barrel Suezmax tanker Maran Orpheus, lifted the first cargo of the new grade from Nembe Creek terminal on October 10, the tanker tracking data compiled by Bloomberg showed.
Nigeria is scheduled to load approximately 65,000 barrels a day of the new Nembe Creek grade this month and next, according to export loading programmes seen by Bloomberg. That would replace most, but not all, of the reduction in flows from Bonny.

Recall that in 2021, a Nigerian company, Eroton stopped evacuating its crude through the NCTL, citing massive crude oil theft activities by vandals.
Between October 7 and 13 alone, the NNPC reported that 205 incidents of crude oil theft were recorded across the oil-producing areas of the Niger Delta region.