Lagos/Abuja — The Federal Government, in collaboration with five major multinational oil companies operating in the country, is to embark on the execution of two green field refineries capable of refining one million barrels of crude oil per day.

Production Sharing Contract (PSC) agreements will also today be signed between the Federal Govern-ment and companies that had paid the signature bonuses for oil blocks won in the 2005 Bid Round.

The refineries would be sited in the Eastern and Western parts of the country with an installed capacity of 300,000bpd and 700,000bpd respectively while the oil majors involved are Shell, Chevron, Mobil, Total and Agip.

Group Managing Director of the Nigerian National Petr-oleum Corporation (NNPC), Engr. Funsho Kupolokun, while briefing newsmen yesterday on the immediate and future plans of the country's petroleum sector, said FG had, however, set aside the sum of N75bn to manage fluctuations in the domestic products market and ensured that the cost of Premium Motor Spirit (petrol) remained at N65 per litre throughout the year.

According to him, government's decision to venture into product refining, an area it previously opted out, was due to an attractive opportunity for investment which exists to fill the refined product capacity gap in the West African Sub-region and other markets.

"Over the years, incremental investment in refining has not caught up with products demand hence there is investment gap that needs to be bridged", he said.

He disclosed that the projects whose feasibility studies have already commenced would on completion be used to supply domestic market as well as meet the needs of Nigeria's West African neighbours.

Against the background of public skeptisms over the desirability of another state-owned refinery, the GMD said alth-ough NNPC will buy into the two plants, majority shareholding will be vested in the industry following the NLNG model, in terms of financing, operation and ownership stakes.

Last year, NNPC/Chevron Joint Venture began the process of constructing a mini refinery in the Escravos, Niger Delta region, with a capacity of 30,000bpd which is to supply fuel for fueling boats, helicopters, fixed wing aircrafts, drilling rigs and offshore /onshore facilities.

Commenting on the downstream sector of the petroleum industry, Kupolokun said a significant increase has been recorded in local sourcing of products as the refineries are now producing steadily bet-ween 70 -75 per cent capacity.

For instance, he said the corporation has witnessed a major drop from the quantity of petroleum product import from about 70 cargoes down to 30 cargoes in the last quarter of 2005.

According to him, a modulator mechanism will be funded with the N75bn to sustain product availability while keeping the range of fluctuation at the pump at "an acceptable level".

Speaking on the investment projections in the country's oil and gas sector, Kupolokun said a total of $67bn is likely to be pumped into the industry between now and 2008.

He said the estimated amount is made up of $34.4bn for oil and $32.7 for gas, adding that unlike previous years, a significant proportion of this investment will be domiciled in Nigeria through local content and participation initiative.

He said government has given a 50 per cent mandatory scope of fabrication and construction work to be domiciled in the country in pursuance of the Nigerian content policy and that this applies to all FPSO topside including pristine vessels up to 75mm and all offshore platforms.

"This directive will grow fabrication tonnage in Nigeria from between 3,000 - 5,000 tons per year to 50,000 ton per year in 2006. Through to 2010 over 10,000 new jobs will be created in the fabrication industry", he said.

The GMD said the country's effort at developing more oil wells to raise both production capacity is yielding fruits as proven oil reserves now stands at 35 billion with production capacity of about 3mbd.

He said about 7 billion barrels of oil and 19 TCF of gas have been discovered in Nigeria's deepwater since 1996 with the Bonga which commenced production only last month contributing 60,000b/d while Erha is coming up with a 210,000b/d in the second quarter of 2006.

Meanwhile, the Federal Government will today sign the Production Sharing Contract (PSC) agreement with companies that had paid the signature bonuses for oil blocks won in the 2005 Bid Round.

Also, oil exports from Nigeria has again taken another round of bashing as Shell said yesterday it had declared force majuere on loading of crude oil produced from the EA shallow water field, following its closure on Tuesday.

Signing of the PSC agreement will be done between the Nigerian National Petroleum Corporation (NNPC), which has been designated concessionaire of the blocks on behalf of the Federal Government, is coming more than three months after the initial period scheduled for the agreements to have been concluded.

It was, however, not clear as at press time how many of the 44 operators that were awarded the oil blocks at the bidding conference held August 2005, will be eligible to sign the PSC today in Abuja on account of having paid for the licences.

Although the Department of Petroleum Resources (DPR) said last month that only 15 of the winners had fully paid their signature bonuses at the expiration of the December 15, 2005 deadline, THISDAY checks revealed that the Federal Government granted a subtle approval to winners, mostly indigenous companies to meet up payment for the licenses up till this month.

"The position now is that anyone that had not paid by today (yesterday) will not come for the PSC signing," a source disclosed.

Indigenous companies alre-ady cleared to sign the PSC include Conoil for block OPL 257 on which it paid $100 million and Sahara Energy for OPL 332 having paid signature bonus of $51.5 million.

While the DPR said President Olusegun Obasanjo had even given approval for the revocation of the remaining 29 blocks which their winners could not meet the payment deadline, officials insist that government's position was to meet the $2.6 billion (N338 billion) revenue target it set for the licensing round.

The results of the bid conference had shown that investors snapped up eight blocks in the deepwater region, which was expected to fetch about $1 billion (N129 billion). Some indigenous firms also won five blocks in the Anambra Basin, two in the Benue trough, while four blocks were won in the Chad Basin. All the six blocks put on offer in the onshore Niger Delta were snapped up, as well as the six acreage in the Continental Shelf.

Meanwhile, exports of crude oil produced from the EA field, offshore Warri in Delta State, will experience considerable delays for the next two months after Shell declared force majuere on loadings yesterday.

"Some 115,000 barrels of EA production remain shut in as a result of technical problems. Consequently, force majeure was declared yesterday for EA offtake for the rest of January and February," the company said in a statement.

In a related development, a coalition of Civil Society organisations in Nigeria, under the aegis of 'Publish What You Pay' (PWYP), yesterday called for a reform of the revenue reporting mechanism of all Federal Government agencies dealing with collection of oil an gas revenue, such as the NNPC, Central Bank of Nigeria (CBN), Federal Inland revenue Service (FIRS), and the Department of Petroleum Resource (DPR).

Rising from an apprasial meeting held to analyse the interim report of Nigerian Extractive Industry Transpa-rency Initiative (NEITI) sponsored audit on the country oil and gas sector, the group asked government to urgently institute a mechanism to correct the observed lapses in the operations of the affected agencies with regard to tracking of oil revenues accruing to the country.

The group, which professes support for transparency in oil sector, observed that the interim NEITI report revealed systematic, operational and procedural problems in the Nigerian extractive industry.

It also said that there some lapses in the procedural and operational agreements betw-een relevant government agencies and all the players in the oil industry as far as oil revenue is concerned.