21-04-06 Nigerian National Petroleum Corporation (NNPC) has approved the acquisition of a working interest in a deep offshore block by China National Offshore Oil Corporation Limited (CNOOC), in which the Chinese state-owned company would pay $ 2.3 bn (N 294.4 bn). Also, crude oil prices continued on the upward swing hitting a record high of $ 74 a barrel.
By the approval, CNOOC has taken over the obligations of a contractor and operator of the deepwater block, OPL 246, the NNPC had earlier assigned to indigenous oil company South Atlantic Petroleum, owned by former Defence Minister, Gen. Theophilus Danjuma (rtd.).

CNOOC, the Beijing-based company said that it was buying a 45 % working interest in OPL 246, where the huge Akpo oil field had been discovered. It said it would pay $ 2.3 bn plus an adjustment of $ 424 mm for financial, operating and capital expenses in the period prior to closing.
"The completion of this transaction represents a milestone in our efforts to expand into the world's mostprolific oil and gas basins," Chairman Fu Chengyu said. "Through the transaction, we have demonstrated our high execution capability."

Since CNOOC signed the deal, Nigeria's foreign oil facilities have suffered intensified attacks by militants. Top NNPC officials who confirmed the approval, said the transactions was for CNNOC with the $ 2.3 bn, to finance the NNPC's 50 % equity stake in OPL 246 as well as South Atlantic Petroleum's 10 % equity in the block.
CNOOC in return, will have a share in the 70 % profit oil from the Akpo field while the NNPC takes the remaining 30 %, as well as in the 80 % cost oil. Also, the officials said that CNOOC is to refund the $ 600 mm already spent by French firm Total, the technical partner, in the development of the field.

NNPC sources said to monitor expenditure in the field development programme which comes under the Production Sharing Contract (PSC) arrangement, a management committee made up of representatives of all the partners in the blocks including Brazil's Petrobras, has been set up to approve all investment made in the block.
"Any cost not approved by the committee is not recoverable," a source said. Oil production from the Akpo field is scheduled to commence in late 2008 and it is expected to quickly reach peak production of 225,000 boepd, of which nearly 80 % is condensate. Meanwhile, crude oil traded in London has hit a record high of $ 74.16 a barrel.

Concerns that increased demand for petrol will squeeze already stretched supplies have kept prices high, as data showed a fall in US gasoline stocks. US-Iran tensions and Nigerian supply concerns are also driving the market. Brent crude later eased to $ 74.10 while US light, sweet crude hovered near its $ 72.40 high.
Analysts said prices were likely to keep spiking higher as long as there was an atmosphere of global political uncertainty fuelled by Iran's dispute with the international community over its nuclear intentions.

According to the US Department of Energy, demand for gasoline is nearly 1 % higher than this time last year, with 9.1 mm bpd being drawn down. Crude oil stocks also fell by 800,000 bpd, according to the latest figures, although stocks remain higher than this time last year.
Already world's energy consumers and producers are scheduled to meet in Qatar to explore ways of bringing down record oil prices that threaten consumer nations' economies and oil demand growth. Minister of State for Petroleum Resources, Dr Edmund Daukoru will lead other oil ministers from member countries of the OPEC to the meeting.

Meanwhile, the Power Holding Company of Nigeria (PHCN) revealed that its strategic gas-fired thermal power station at Egbin, Lagos has become largely under utilised due to shortage of gas while revenue accruing to the electricity corporation has dropped from N 6.6 bn to N 5.5 bn following the recent spate of vandalisation of oil and gas facilities by local militia groups in the Niger Delta.
Managing Director of the Power Holding Company of Nigeria, Engr. JosephMakoju disclosed this at the opening of the 9th meeting of Directors General and Managing Directors of the West African Power Pool, Zone “A” holding in Abuja. The meeting has in attendance representatives of electricity corporations from Ghana, Niger, Cote d’ Ivoire, Burkina Faso and host country, Nigeria.

The dismal power situation report is coming on the heels of a fresh threat by the Movement for the Emancipation of the Niger Delta (MEND) to unleash another round of terror on facilities and personnel of oil companies in the volatile region. The Nigerian government had launched a development plan worth a hundred and twenty tn naira to develop the Niger Delta, but the group which claims to be fighting for the rapid development and the rights of the indigenous people to exercise control over the region's resources has dismissed it as a fluke.
Makoju remarked that the PHCN was doing pretty well before the militants launched their attacks of sabotage on oil and gas facilities, but expressed hope that with the outcome of the last parley between the federal government and leaders of the Niger Delta the vandalised gas pipelines will be repaired, gas supplies resumed and power generation restored to its former state.

Minister of Power and Steel, Senator Liyel Imoke who was also at the West African Power Pool meeting admitted that the problem of insufficient power generation was beyond the PHCN and appealed to the Nigeria National Petroleum Corporation (NNPC) to take advantage of the relatively improved security atmosphere in the Niger Delta to effect repairs on the vandalised gas pipelines.
"The turbines are there waiting for gas but we don't have gas to run them because of the situation in the Niger Delta over the last two months or so. It is actually a pity that not many Nigerians understand that the problem is for reasons extraneous to Power Holding Company of Nigeria. We apologise over the pains Nigerians have been going through as a result of the current power situation but until we put a stop to this idea of vandalising vital utility facilities we will continue to have this kind of unfortunate situation," Imoke said.

Underlining the importance of the meeting, Imoke said that a common power pool in the West African subregion would go a long way in resolving Nigeria's poor power situation as it will allow the countries in the pool to import and export power depending on the availability of power in the respective countries.
WAPP, Imoke said, is designed to promote greater integration of the peoples of the West African subregion and in line with the evolving practice all over the world which emphasises free and borderless movement of capital, human capacities, competencies, goods and services. He noted that the WAPP project represented a bold step by the founding fathers of ECOWAS to minimise country differences on the political economy of the subregion as it in global practice transcends regional, ethnic, ideological, racial and political boundaries.

According to the minister, Nigeria places very high premium on the improvement of its local power situation as well as the establishment of the power pool and would do anything within its powers to ensure that both visions were realised. He however urged West African countries yet to endorse the Energy Protocol, stressing that the document was critical to sending a signal of unity of purpose within WAPP to investors and multi-lateral agencies. Only Ghana, Nigeria and Niger have signed the said protocol in West Africa.
"For sustainable development to take root in the subregion, there is no greater single catalyst than the provision of adequate power which will promote industrialisation and socio-economic development. It is expected that the subregional integration occasioned by the WAPP necessitates the merging of historically distinct and separate electricity production and supply markets into one huge subregional market and some perennial socio-economic problems associated with inefficient electric production and supply will diminish," the minister said.