Nigeria’s Central Bank Tightens Grip on Petroleum Export Inspection and Revenues - Africa’s premier report on the oil, gas and energy landscape.

Nigeria’s Central Bank Tightens Grip on Petroleum Export Inspection and Revenues

By Masha Otula, in Abuja

The Central Bank of Nigeria (CBN) has appointed new petroleum export pre-shipment inspection agents. CBN also listed new exemption categories under the restrictions on foreign exchange revenues of petroleum exports that it introduced in February.

CBN distributed 31 oil and gas export terminals to nine inspection agents with each Nigerian company assigned three to five terminals. The Bonny, Forcados and Qua Iboe terminals were assigned to Neroli Technologies while Brass, Escravos and the Abigail-Joseph floating production, storage and offloading (FPSO) vessel were assigned to Offshore Bulk Inspection.

But CBN did not assign the Nembe crude stream or the Galilean 7 FSO from which it is produced to an inspection agent in its latest circular. Production of the Nembe crude stream started last year. Its output averaged 24,000Barrels of Oil Per Day (BOPD) from 25 May 2023 to 31 March and 32,000BOPD in April 2024, according to upstream regulator NUPRC.

“A market participant said Nigeria needs to reduce the “gangs of competing regulators” operating at its petroleum export terminals and unify multiple certifications of petroleum export quantity and quality if it expects to provide genuine ease of doing business.

The Aje, Abo, Okono and Ugo-Ocha streams were assigned to Candid Oil Services even though Aje last produced oil in November 2021, according to NUPRC. And Okono is not producing as we speak. Norwegian independent Petronor said in November 2023 that a 25,000 Barrels of Oil Equivalent Per Day (BOEPD) redevelopment target had been set for Aje as a gas producer. Partners in the asset would soon complete the re-processing of seismic data in preparation for drilling four or five gas wells, constructing a 30 kilometre gas pipeline and getting an FPSO with gas processing capacity, Petronor said. But the company did not provide a restart date. CBN also assigned LNG and NGLs exports from terminals in Escravos and Bonny to Dakee Engineering and Construction.

But CBN is yet to name inspection agents for oil products exports. The 650,000Barrels Per Stream Day (BPSD) Dangote refinery, which started to export naphtha in March 2024, said on May 8, 2024, that it expects to start gasoline (petrol) production in June. An industry source said Dangote has now received approval to start its residual fluid catalytic cracker. The refinery previously said it expected to export 8Million litres/day of petrol when it ramps up production to full capacity.

CBN may also later name inspection agents for the jetties of the NNPC-operated 210,000BPSD Port Harcourt and 125,000BPSD Warri refineries, which are both under different rehabilitation contracts. An industry source said while work is ongoing at both refineries much remains to be done and it would not be surprising if neither Port Harcourt nor Warri restart production this year. But NNPC maintains the two refineries will restart in 2024. Previous restart deadlines have been missed. The Warri refinery was shut in 2019 and Port Harcourt in 2020 but industry sources said that naphtha and fuel oil from the 5,000BPSD Waltersmith and 11,000 BPSD Aradel modular refineries are currently exported from the jetties of the Warri and Port Harcourt refineries, respectively.

Export pre-shipment inspection agents “ascertain the quality, quantity and price competitiveness” of exports, acting as agents of the CBN as it monitors “the repatriation of all export proceeds”. A market participant said that the inspection agents always had a low profile but CBN’s latest announcement may signal their increasing prominence as the central bank continues aggressive foreign exchange reserves management in response to a weak and volatile naira and high inflation.

A separate market participant said Nigeria needs to reduce the “gangs of competing regulators” operating at its petroleum export terminals and unify multiple certifications of petroleum export quantity and quality if it expects to provide genuine ease of doing business. CBN also announced two monitoring and evaluation agents, Arlington Securitas Nigeria and DV Howells Nigeria, to supervise the work of the nine inspection agents.

But an energy lawyer said CBN is only discharging its statutory responsibilities and that the Pre-shipment Inspection of Exports Act, which empowers the central banker, dates back to 1966 and was modified by the military government in 1996 before being compiled as one of the Laws of the Federation of Nigeria (LFN) in 2004.

The paper trail generated in compliance with that law was evidence and the basis of Chevron’s defence in a suit filed by the federal government alleging that a Chevron subsidiary did not declare a cargo of oil that was exported to the US. Therefore the provisions of the law and its enforcement by CBN actually protects oil companies, the lawyer said.

“CBN did not assign the Nembe crude stream or the Galilean 7 FSO from which it is produced to an inspection agent in its latest circular. Production of the Nembe crude stream started in 2023. Its output averaged 24,000BOPD from 25 May 2023 to 31 March 2024 and 32,000BOPD in April 2024, according to upstream regulator NUPRC.”

CBN has also now said the restriction it introduced in February for 50% of oil export revenues to be maintained as domestic bank balances for 90 days by foreign upstream companies, permits withdrawals within the 90-day period for the payment of local corporate taxes, petroleum taxes and royalties, cash calls and contractor invoices, operating loan payments or hard currency sales in the official domestic market.

Share Article


Sponsored

No comments yet.

Leave a comment

Comment form

All fields marked (*) are required

© 2024 Festac News Press Ltd..