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Nigeria Audit Urges Revamp of ‘Unsustainable’ State Oil Company

Lamido Sansusi (Bloomberg) — Nigeria’s state oil company operates an “unsustainable model” and should refund a minimum $1.48 billion to the government, a PricewaterhouseCoopers LLP audit recommends. The Nigerian National Petroleum Corp. spends 46 percent of domestic oil proceeds on operations and subsidies, according to highlights of an 18-month review between January 2012 and July 2013 released by the office of Nigeria’s Auditor General. The NNPC can’t sustain monthly remittances to government or meet operational costs from crude revenue and incurs third-party liabilities to fund the gap, according to the statement. “PwC therefore recommended that the NNPC model of operation must be urgently reviewed and restructured,” according to Auditor General Ukura Samuel’s statement. “The current model which has been in operation since the creation of the corporation cannot be sustained.” The audit came after the former central bank governor of Africa’s largest oil producer, Lamido Sanusi, wrote to President […]

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Nigeria Says It Has Budget Plans for Oil Price as Low as $45

(Bloomberg) — Nigeria’s Finance Ministry isn’t wedded to an oil benchmark price of $65 per barrel estimated in this year’s budget and has plans on how it will respond if crude drops lower. The government has a “scenario-based approach with accompanying adjustment measures, given the uncertainty as to where the oil price would eventually settle,” Paul Nwabuikwu, spokesman for the ministry, said in an e-mail on Thursday. “The scenarios developed go as low as $45 per barrel.” Crude prices have plunged by more than half since June, cutting revenue in Africa’s biggest oil producer and forcing the government to tighten its budget. The currency has slumped 17 percent against the dollar in the past six months, the most of more than 30 African nations tracked by Bloomberg. The government will introduce additional measures to protect capital expenditure in the budget if oil prices remain below $65 a barrel, Nwabuikwu […]

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Nigeria: Jonathan Receives NNPC Audit Report

Lamido Sanusi Photo: Leadership Abuja — PRESIDENT Goodluck Jonathan yesterday received the report of the forensic investigation into the Nigerian National Petroleum Corporation (NNPC) with a pledge to ensuring that all aspects of the reports would be implemented to move the industry forward. The submission of the report is coming barely 24 hours after Sanusi’s predecessor in office, Prof. Charles Soludo, raised fresh allegation against the Co-ordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, that no less than N30 trillion had been mismanaged under her tenure. But receiving the report at the new Banquet Hall Presidential Villa, Abuja, Jonathan admitted that there had been so much of controversy over this NNPC and expressed the hope that with the submission of the reports, all the issues generated would be put to a final stop. Though details of the reports were not made public, the President has […]

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U.S. Drivers’ $2 Gas Dream Interrupted by Refinery Shutdowns

(Bloomberg) — The drive to $2 gasoline has hit a roadblock. Retail gasoline in the U.S. has risen 8.4 cents in the past two days, according to Heathrow, Florida-based AAA, the largest two-day increase since March 2011. The national average hasn’t fallen since Jan. 25, when it broke a 123-day losing streak. The spike at the pump follows a 14 percent gain in oil prices and maintenance shutdowns at refineries. Demand for gasoline is at the highest seasonal level since 2008. “Drivers had a great run of steadily declining gas prices, but that trend is over for now,” said Michael Green, a Washington D.C.-based spokesman for AAA. “The market has been volatile, but it’s a safe bet that drivers will pay more in March than they are today.” The average retail price was $2.151 a gallon Wednesday, AAA said, after sinking to $2.033 on Jan. 25, the lowest level […]

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Weatherford Cuts Jobs Amid ‘Once-in-Lifetime’ Industry Change

(Bloomberg) — Weatherford International Plc became the latest energy company to announce job cuts from falling crude prices as the oilfield-services industry bears the brunt of slashed spending plans. “We’re now confronted with an unusually severe market contraction and concurrently a once-in-a-lifetime industry change,” Chairman and Chief Executive Officer Bernard Duroc-Danner told analysts and investors on a conference call Thursday. “It is much easier to make efficiency leaps than in a strong market. This is the one silver lining to the violent downturn in oil in our market.” Weatherford will cut 8,000 workers in the first half of the year. When added to 6,000 firings from last year, the Geneva-based company’s total workforce will shrink 25 percent from the start of 2014, Chief Financial Officer Krishna Shivram said on the call. Weatherford’s announcement brings the number of job cuts among oilfield-services companies to 25,000, with more promised. The industry, […]

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Alberta’s premier stumps for Keystone XL

Alberta’s premier says U.S.-Canadian energy partnership about more than just Keystone XL. Photo courtesy TransCanada WASHINGTON, Feb. 5 (UPI) — While clearly in the region’s interests, the energy relationship between the United States and Canada is about more than Keystone XL, Alberta’s premier said. Submitted for approval more than six years ago, TransCanada’s planned Keystone XL oil pipeline from Alberta has become a scapegoat for the politics surrounding the debate over North American energy. Alberta Premier Jim Prentice told members of the U.S. Chamber of Commerce of his long-standing support for the pipeline. "I have long been a vocal advocate for the Keystone pipeline and for its approval by the U.S. government," he said in prepared remarks sent to UPI. From vetting of public comments on a State Department review, to delays because of legal challenges over the pipeline’s route in Nebraska, the White House has been accused of […]

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Clock Starts Ticking On $5.3B Tax Break For North Dakota Oil

Tumbling crude oil prices have started the clock ticking on a potential $5.3 billion, two-year tax break for North Dakota’s oil producers. WILLISTON, N.D., Feb 5 (Reuters) – Tumbling crude oil prices have started the clock ticking on a potential $5.3 billion, two-year tax break for North Dakota’s oil producers. The countdown, which started this week, holds the promise of a silver lining of sorts for oil producers and their contractors in the No. 2 oil-producing U.S. state, many of whom have struggled with a roughly 50 percent drop in oil prices since last June. North Dakota officials designed the tax waiver in 1987 to encourage drilling. Here’s how it works: North Dakota waives its 6.5 percent oil extraction tax if the monthly price of benchmark West Texas Intermediate (WTI) crude at the Cushing, Oklahoma, transport hub falls below $52.59 per barrel for five consecutive months. For January 2015, […]

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Deloitte: Low Oil Prices Creating Need for More Efficient Operations

Upstream oil and gas companies will have to learn how to operate differently in order to weather the low oil price environment, Deloitte officials said Wednesday. Unlike the downstream sector, which has been forced to operate efficiently because it doesn’t have the ebbs and flows that upstream does, costs on the exploration and production side have spiraled upwards, said Rick Carr, principal and leader of Deloitte LLP’s oil & gas operations and supply chain, at a media briefing in Houston.    The North America shale market is “still pretty embryonic”, with nobody really having cracked the nut of running a lean, efficient operation, said Carr. In the case of North America shale operations, prices for oilfield services have not been dictated by the actual cost of the service, but what people are willing to pay to get a well done. Companies have been willing to pay 30 to 50 […]

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Midland: Weathering the Downturn in Crude Oil Prices

The West Texas city of Midland has yet to be affected by the downturn in crude oil prices, but a prolonged energy slump would eventually be felt. Midland, Texas’ downtown. Source: City of Midland Chamber of Commerce With crude oil prices at their lowest levels in years, municipalities that depend primarily on the oil and gas industry for their economic vitality are suddenly at risk of seeing drastic slowdowns in the local economy, and possibly some red ink. One such city is Midland, Texas, an oil and gas town like few others. Oil is its lifeblood, and throughout its history, the Tall City has experienced many up-and-down cycles in the energy industry. So, how is it weathering the current one? The short answer is that months after oil prices first began to slump, the city itself is doing fine – so far. In fact, a relatively short-term slowdown would […]

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