Connect with us

Business

Nigeria Doubles Down On Oil After Years Of Trouble

Published

on

After months of stalling because of Covid restrictions and OPEC cuts, as well as significant international criticism over misplaced funds, Nigeria appears to be optimistic about the future of its faltering oil industry in a time when few others are.
The Nigerian government announced this week that it expects the country to produce 1.88 million barrels per day of crude oil in 2022, assuming a benchmark price of $57 per barrel. In the 2022-2024 Medium-Term Expenditure Framework (MTEF), just approved by the senate, the government also predicted GDP growth of 4.2 percent and inflation of 13 percent in 2022. Inflation in Nigeria decreased to 17.01 percent in August, in a country that has continued to struggle with a double-digit inflation rate since 2016. 
This is a highly optimistic plan seeing as Nigeria, Africa’s largest economy, was hit particularly hard by the Covid-19 pandemic, from which it is still recovering. The Nigerian economy contracted 1.92 percent in 2020, after a growth of 2.92 percent in 2019. However, the contraction was lower than the World bank estimate of a 4 percent contraction or the IMF estimate of 3.2 percent.
The hopeful budget approval follows President Muhammadu Buhari’s signing of the Petroleum Industry Bill into law in August. This comes after two long decades of delays in approving the PIB, at a time when much of the rest of the world is moving away from fossil fuel strategies towards green policies with a focus on renewable energy. Plans to stop the sale of diesel and petroleum vehicles as well as targets for net zero-carbon emissions by 2050, across Europe and North America, make the new Petroleum Industry Act (PIA) appear somewhat outdated. However, advocates for the Bill believe that the African continent will continue to rely on oil production for fuel well into the next decade. The President stated in August at the inauguration of the Steering Committee and PIA Implementation Group that Nigeria may have lost as much as $50 billion worth of investment because of years of delays in enacting the PIA, as investors were uncertain of Nigeria’s oil and gas outlook. 
There has been significant criticism over Nigeria’s failure to establish a better regulatory environment for its oil and gas industry until now, which would have increased investor interest in the region. This is particularly pertinent at a time when other African states are beginning to develop their oil industries, and further competition comes from new emerging markets such as Guyana and Suriname. 
Critics also point towards the $14 billion in funds provided to develop the Niger Delta region, the heart of the Nigerian oil industry, that was ill spent between 2001 and 2019. The funds were expected to support projects to “offer a lasting solution to the socio-economic difficulties of the Niger Delta Region and to facilitate the rapid and sustainable development of the Niger Delta into a region that is economically prosperous, socially stable, ecologically regenerative and politically peaceful.”
The inability to establish an adequate regulatory environment for foreign oil and gas investors for so long, as well as government’s failure to use funds to develop its oil-rich Niger Delta region, have put the country at the bottom of the list for many investors now attracted to up-and-coming oil regions without such a difficult past in the sector. 
Not to forget, Nigeria is not out of the woods, still battling with reduced OPEC+ oil quotas and the lack of investment that came alongside them. Angola, Nigeria, and Kazakhstan have failed to increase their oil production in line with the OPEC+ easing of cuts this August, primarily due to years of underinvestment in the oil-rich nations’ energy industries.
In addition, concerns around Covid-19 restrictions continue to plague Nigeria’s oil industry, as the Delta region faces yet another lockdown if cases continue to rise. The challenges of 2020 could be seen all over again should Rivers State go into lockdown, with oil firms facing difficulties in transporting personnel to and from oil fields, as well as restrictions affecting pipeline and facilities maintenance, as was the case last year. 
But the Nigerian government and those left in Nigeria’s oil industry are hopeful that ongoing demand from the African continent and increasing demand from Asia for oil and gas could help boost the country’s appeal following the enactment of the PIA. With 37 billion barrels of proven oil reserves, ranking 10th in the world, Nigeria has always had significant potential to become oil superstar but has until now lacked the regulatory framework to make this dream a reality until now. 
So, the question is whether the “landmark” PIA will really be as ground-breaking for Nigeria’s oil industry as once hoped. The Nigerian government holds out hope for the new Act attracting greater foreign investment in the oil-rich nation, but time is yet to tell whether oil majors are willing to take a gamble on the African state so late in the game.
Other companies that look to capitalise on higher prices this year:
Transocean (NYSE:RIG)  After having missed on earnings for a number of quarters in a row, this offshore rig giant is seeing opportunities left and right as oil majors are once again betting big on offshore oil and gas production. The increasing market for offshore operations couldn’t come at a better time for Transocean, which remains one of the more speculative players in its sector.
At the moment, the company is looking to expand its footprint in the Gulf of Mexico. Earlier this month, it landed a $252 million firm contract for its new, ultra-deepwater drillship, the Deepwater Atlas. Transocean’s client, BOE Exploration and Production LLC looks to commence operations at the Shenandoah project in the 3rd quarter of 2022.
Suncor Energy (NYSE:SU; TSE:SU): Suncor has been in the news this week as it decided to shut down some of its oil sands production due to a mechanical disruption. Syncrude, majority owned by Suncor, produces some 275,000 bpd of crude oil from bitumen at its upgrader in Alberta, according to the latest data, which was for January to May.  Despite the disruption, Suncor remains one of the most attractive oil plays in Canada, which some see as the best contrarian oil bets out there.
Suncor’s relatively low extraction costs per barrel, coupled with strict ESG standards and long lasting reserves make the company interesting for long-term oil investors.
And Suncor isn’t just focusing on its flagship Syncrude project. Two weeks ago, the company announced the plan to extend the life of the Terra Nova FPSO. Together with Murphy Oil and Cenovus, and with support from the local government, Suncor looks to extend the production life of the Terra Nova FPSO by around 10 years.
Bradstock Reports for Oilprice.com

Print Friendly, PDF & Email
Continue Reading

Business

Nigeria, 12 Others To Drive Global Trade By 2030 – Report

Published

on

A trade research report has indicated that Nigeria and 12 other countries will be responsible for the driving of the global trade to the tune of $30 trillion by the year 2030.
The research, which was commissioned by Standard Chartered and prepared by PwC Singapore posited that Nigeria and 12 other countries would be responsible for driving global trade to $30tn by 2030.
According to the report sponsored by the Singaporean organisation, the global exports would be more than double from $17.4tn to $29.7tn over the next decade, while much of the growth would be driven by 13 markets.
It said Nigeria would be growing at an annual rate of 9.7 per cent, with about $112bn in exports by 2030, through key corridors such as India, Indonesia and Mainland China.
It also stated that Kenya, the second African nation on the list, would be growing by 7.6 per cent annually, with $10bn in exports by 2030 through key corridors namely, Pakistan, Uganda and the United States of America.
The list consists mostly of Asian countries with Mainland China contributing the most at $5.02tn by 2030 and growing at 7.1 per cent annually.
Other countries are Hong Kong ($939bn, 5.7 per cent), South Korea ($972bn, 7.1 per cent), and India ($564bn, 7.6 per cent).
Bangladesh, Singapore, United Arab Emirates, Indonesia, Malaysia, Vietnam, and Saudi Arabia also featured in the report.
The report is based on an analysis of historical trade data and projections until 2030, as well as insights from a survey of more than 500 C-suite and senior leaders in global companies.
According to the report, global trade will be reshaped by five key trends: the wider adoption of sustainable and fair-trade practices, a push for more inclusive participation, greater risk diversification, more digitisation and a rebalancing towards high-growth emerging markets.
It said almost 90 per cent of the corporate leaders surveyed agreed that these trends would be shaping the future of trade and would be forming part of their five to 10-year cross-border expansion strategies.
The research also found a significant trend towards the adoption of sustainable trade practices in response to climate concerns and a rising wave of conscious consumerism.
It said while almost 90 per cent of corporate leaders acknowledged the need to implement these practices across their supply chains, only 34 per cent ranked it as a ‘top three’ priority for execution over the next five to 10 years.

By: Corlins Walter

Print Friendly, PDF & Email
Continue Reading

Business

Currency In Circulation Rose By N129bn In Oct – CBN

Published

on

The currency in circulation in the country rose by N129bn to N2.97tn in October from N2.84tn in September, according to the figures from the Central Bank of Nigeria (CBN).
The currency in circulation had fallen to N2.78tn in August from N2.81tn in July.
It stood at N2.74tn in June, N2.79tn in May, N2.79tn in April, N2.8tn in March, N2.78tn in February and N2.83tn in January.
The CBN said, “The currency in circulation increased by N465.47bn or 19.06 per cent to N2.91tn in 2020, compared with N2.44tn in 2019.
“In 2020, there were higher withdrawals by DMBs than deposits, due to the panic need to hold cash to deal with the emergencies and reduced banking hours due to restrictions to curb spread of the pandemic”.
The apex bank said to maintain public confidence and ensure integrity of circulated notes in the economy, it developed and unveiled a clean note policy and banknote fitness guidelines in 2018.
The guidelines outlined details of quarterly and yearly activities towards the achievement of this objective.
According to the CBN, the clean note policy encapsulates diverse currency management activities to preserve the integrity and maintain the quality of banknotes in circulation.
The policy provides that every newly printed and existing banknotes should conform to predefined standards before circulation and re-circulation in the economy.
Currency in circulation is defined as currency outside the vaults of the central bank – that is, all legal tender currency in the hands of the general public and in the vaults of the deposit money banks.
The CBN said it employed the “accounting/statistical/withdrawals and deposits approach” to compute the currency in circulation in the country.
It said this approach involved tracking the movements in currency in circulation on a transaction-by-transaction basis.
According to the CBN, for every withdrawal made by a DMB at one of CBN’s branches, an increase in CIC is recorded; and for every deposit made by a DMB at one of CBN’s branches, a decrease in CIC is recorded.
The transactions are all recorded in the CBN’s CIC account, and the balance on the account at any point in time represented the country’s currency in circulation.

Print Friendly, PDF & Email
Continue Reading

Business

CBN’s eNaira Records 600,000 Downloads Within One Month

Published

on

Barely four weeks after its launch in October, the eNaira app of the Central Bank of Nigeria (CBN) has witnessed about 600,000 downloads.
The CBN Governor, Godwin Emefiele, who disclosed this in a statement at the weekend, said, “In less than four weeks since its launch, almost 600,000 downloads of the e-Naira application have taken place.
“Efforts are ongoing to encourage faster adoption of the e-Naira by Nigerians who do not have smart phones.
“The support of the financial industry will be critical in the ongoing deployment of the e-Naira and efforts are ongoing to encourage continued partnership between the CBN and stakeholders in the financial industry”.
The CBN governor also said that building a robust payment system that would provide cheap, efficient, and faster means of conducting payments for most Nigerians have always been the focus of the apex bank.
According to him, the growing pace of digitization globally makes it essential that they leverage on digital channels in fulfilling this objective.
Emefiele disclosed that total transaction volumes using digital channels were more than doubled between 2018 and 2020, as volumes rose from 1.3 billion to over 3.3 billion financial transactions in 2020.
He added that digital payment channels also helped to support continued conduct of business activities during the lockdown.
The CBN boss noted that the robust payment system has continued to evolve towards meeting the needs of households and businesses in Nigeria. This, according to him, reflects the confidence people have in the payment system.
He said that between 2015 and September 2021, about US$900 million has been invested in firms being run by Nigerian founders.
“Notwithstanding these gains, close to 36 per cent of adult Nigerians do not have access to financial services.
“Improving access to finance for individuals and businesses through digital channels can help to improve financial inclusion, lower the cost of transactions, and increase the flow of credit to households and businesses,’’ Emefiele added.

Print Friendly, PDF & Email
Continue Reading

Trending