Month: April 2020

The Federal Government is set to shut down all its oil refineries in its effort to secure funding and a model to upgrade them, the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) said yesterday.

In statements posted on Twitter, Kyari said the oil industry will look to cut costs and extend payments wherever possible to survive oil prices that hit 18-year lows late last month.

“Today, after proper scoping, which was not done in the past, we know exactly what to do to get them back on stream,” Kyari said.

The three Nigerian refineries have worked only sporadically due to years of underinvestment. The government has been working to revamp them but has struggled to find external financing to do so. Running the refineries has proved costly for Nigeria, as they are decades old and poorly maintained.

While Kyari said they had secured funding without providing details, several previous deals to fund repairs have fallen through, and a source close to the discussions told Reuter’s other funding had yet to be confirmed.

Aside from proper scoping, we’re also going to have an Operation & Maintenance (O&M) contract, a different model of getting the refineries to work. We are looking at the NLNG structure where world-class processes will always be in play. We’ve seen it work before with success.

The Nigeria LNG model is run by international companies such as Shell, Total and Eni alongside NNPC.More in Home

Kyari also expressed optimism that a meeting this week between OPEC and other producers could yield a fresh deal to shore up oil prices. “We believe the ongoing engagements between global oil producers will bring back demand and once that happens, the market will balance and fully recover by year-end,” he said.

 Vanguard

The Nigerian National Petroleum Corporation says demand for Nigeria’s crude oil in March dropped by 6.8 million barrels due to the COVID-19 pandemic.

The Group Managing Director of NNPC, Mele Kyari, said this on Channels Television’s Sunrise Daily programme on Wednesday.

Kyari said the drop in the demand for oil was not peculiar to Nigeria but global.

When asked how Nigeria’s crude is doing on the international market, he said, “Well, it is doing badly but it is improving. Last week, it went down to close to $15 per barrel but as I speak this morning, we are at $32.79 to a barrel.

“So, we think with all the engagements going on, countries going back to work like in Europe means consumption will come back, demand will rise because we have lost about 6.8 million barrels of demand in March alone.

“And when things come back, the market will balance and make sure that the market recovers. I am sure you are aware of all the engagements that have gone on internationally with OPEC, producers and the partners to make sure that there is balance.”

Kyari expressed optimism that things would rebound before the end of the year.

source: Punch

According to Anna Belova, senior oil and gas analyst at GlobalData: “Gas flaring is not only a pollution issue, but also represents significant forgone revenues and economic loss. Ten countries flared over 9.5 billion cubic feet of gas per day (bcfd) in 2019, which exceeded Germany’s demand for natural gas that year. The value of gas flared by top ten countries exceeds US$9.5bn if priced at the US Henry Hub gas prices and adds to $19bn if priced at the UK National Petroleum Board (NPB) prices.”

Belova said lack of access to markets and small volumes of gas produced at individual sites typify the main reasons behind significant flaring volumes globally. Low domestic gas prices in the US, Russia, Iran, Nigeria and Algeria further exacerbate the situation.

In Nigeria, however, the federal government has approved the Nigerian Gas Flare Commercialisation Programme. The programme which was launched in 2016 will offer flare gas for sale by the government through a transparent and competitive bidding process.

A structure has been devised to provide project bankability for the buyers of flared gas.

The purpose of the gas flare commercialisation programme is to reduce the flaring and venting of associated methane gas.

The Department of Petroleum Resources (DPR) recently extended the Bid Submission Due Date (BSDD) of the Request for Proposal (REP) of the Nigeria Gas Flare Commercialisation Programme (NGFCP) by six weeks.

Paul Osu, Head, Public Affair at DPR, who made the announcement in a statement said the extension was sequel to the bidder’s conference which held on February 17, 2020 in respect to the NGFCP.

“Accordingly, the new submission due date shall be April 10. Consequently, qualified applicants should note that inputs, comments and observations on the draft Gas Sales Agreement (DSA) Milestone Development Agreement (MDA), Connection Agreement (CA) and Deliver or Pay Agreement (DoPA) posted on the portal were expected on or before March 5.

“Furthermore, the DPR shall provide relevant updates for data prying and leasing in the data room as necessary within the next one week,” he said.

Osu said that in a bid to further incentivise the programme, the minimum floor price for flared gas would be $0.25 per million standard cubic feet (mscf) for land sites; swamp and shallow offshore sites would be $0.15/mscf, while the minimum floor price for deep offshore would be $0.10 /mscf.

Source: Business Day

The Nigeria Security and Civil Defence Corps says it averted an oil pipeline explosion in the Aboru, Agbado/Oke Odo Local Council Development Area, Lagos State on Sunday.

The commander of Agbado/Oke Odo Unit, Mr Malik Ojetola, said in a statement on Sunday that the unit rushed to the scene after received a distress call from members of the affected community.

“A distress call was received from the CDA on Sunday at 6.30 a.m that petrol was gushing out of an oil pipeline at Ola Mummy – Aboru.

“On getting to the spot, we discovered that the fuel was not gushing out directly from an NNPC pipeline but a location adjacent – about 50ft from the NNPC pipeline.

“A call was put through to an NNPC maintenance team; the team arrived at 10.15 a.m,” he said.

“The attached pipe has a tap-like valve permanently opened where it is connected to the pipeline.

“The other end of the attached pipe also has a tap valve normally used to open and close the flow of the fuel.

“Firefighters from the Lagos State Fire Service and Lagos State Emergency Management Agency later joined the team on ground to avert explosion and prevent any casualty.

“The maintenance work was completed around 2.12 p.m.”

SOURCE: Punch

At least $6 billion is required to develop infrastructure to enable Nigeria achieve the 2023 target of  five million tons of liquefied petroleum gas (LPG) also called cooking gas consumption.

Programme Manager, National Liquefied Petroleum Gas Expansion Plan, recently constituted by the Federal Government to advance consumption of gas in-country, Mr. Dayo Adeshina, told The Nation that with the cash, the infrastructure that will aid the attainment of that local consumption target could be built.

He noted that with increased use of LPG in various sectors of the economy, the volume of carbon dioxide emission would substantially reduce, adding that more jobs would be created.

Adeshina, a former President of Nigeria Liquefied Petroleum Gas Association (NLPGA), gave a breakdown of the various sectors of the economy where the infrastructure would be built and the estimated cost.

In production sector where players like the Nigerian National Petroleum Corporation (NNPC), oil majors, such as Shell, ExxonMobil, Chevron, Total and independent such as Seplat and Aiteo operate, Adeshina stated that about $500 million is required to build the infrastructure for LPG production from associated gas, including liquefied natural gas and natural gas liquids.

In product transportation sector like rail, shipping, including other vessels as operated by the Nigeria Liquefied Natural Gas (NLNG), NNPC, Inland Waterways and Railways, an estimated $1.5 billion is required for the infrastructure.

For the storage, manufacturing, bulk breaking and bottling sector, he said storage and manufacturing, such as storage of shipped LPG in  large storage tanks and depots, use of trucks (bulk trucks) with estimated 5000 bridgers (trucks) required, including inland storage facilities, will require investment of $500 million. Operators in this sector include NLNG, NIPCO, Oando and Harig.

For bulk breaking and bottling, where major marketers and small and medium enterprises (SMEs) can operate, Adeshina said an investment of $750 million purchasing of cylinders, refilling of LPG in smaller cylinders and bottles, estimated 10,000 trucks and about 3000 filling plants required.

In distribution and marketing where the product is transported from bottlers to end users as well as procurement of cylinders for the implementation of marketer-owned cylinder model, he said $800 million investment is required. Some of the companies playing in this sector include TotalGaz, Oando and NIPCO.

Investment in end-users infrastructure has the highest amount of $2 billion. It will go into heating, cooking, manufacturing activities, automotive, industrial, cylinder delivery trucks and bobtails, establishments of autogas workshops and training of personnel, he said.

The Federal Government had set a target to achieve LPG consumption of five million tons by 2023 with a target to get 60 million homes on board, which will increase household LPG consumption from 750,000 tons to two million tons by 2021 through increased general acceptability and awareness, among others.

Other areas include agro-processing, where it intends to achieve one million tons of LPG consumption by 2021, through clean mechanised farming by 20 per cent reduction in diesel/fuel consumption. Through this carbon dioxide (CO2) emission of total agro-processing machinery activities will be reduce by 10 per cent and will also increase organic and efficient farming

SOURCE: The Nation

Amid the rising cases of coronavirus in Nigeria, presidential directive to lockdown Lagos state and Abuja for 14 days and further drop in crude oil prices, especially Bonny Light which fell to USD21.41 per barrel on Thursday, April 2, 2020, from $24.83 per barrel on Thursday, March 26, 2020, the Nigerian equity market depreciated by 3.51 per cent week-on-week, (WoW).

Consequently, the All Share Index (ASI) and market capitalisation of the Nigerian Stock Exchange (NSE) declined by 3.51 per cent to close for last week at 21,094.62 absolute points and N10.99 trillion respectively as against 21,861.78 absolute points and N11.39 trillion recorded in the preceding week.

This in nominal term translates to a loss of N399.82 billion in market capitalisation value (WoW).

Amid sustained bearish activity, most of the sub-sector gauges declined: the NSE Banking, the NSE Consumer Goods, the NSE Industrial and the NSE Insurance indices fell by 5.26 per cent, 3.93 per cent, 1.22 per cent and 0.27 per cent, respectively to 234.47 points, 314.16 points, 1,028.33 points and 117.77 points respectively.

Only the Oil & Gas sector closed positive by 2.33 per cent week-on-week basis, driven by renewed hope of an unprecedented output cut from the OPEC+ cartel in the coming week, after the U.S. president intervened in the ongoing “oil price war between Riyadh and Moscow.

However, transaction volumes increased by 5.71 per cent to 1.53 billion shares. A total turnover of 1.534 billion shares worth N11.267 billion in 18,928 deals were traded this week by investors on the floor of the Exchange, in contrast to a total of 1.452 billion shares valued at N14.918 billion that exchanged hands last week in 21,828 deals.

The Financial Services industry (measured by volume) led the activity chart with 1.105 billion shares valued at N7.100 billion traded in 12,225 deals; thus contributing 71.99 per cent and 63.02 per cent to the total equity turnover volume and value respectively.

The Industrial Goods followed with 218.471 million shares worth N1.236 billion in 1,610 deals. The third place was the Consumer Goods industry, with a turnover of 134.599 million shares worth N1.855 billion in 2,332 deals. Trading in the Top Three Equities namely, Sterling Bank Plc, Zenith Bank Plc and Meyer Plc. (measured by volume) accounted for 752.359 million shares worth N3.247 billion in 4,039 deals, contributing 49.03 per cent and 28.82 per cent to the total equity turnover volume and value respectively.More in Home

In the absence of any major breakthrough in efforts to find a lasting solution to the scourge of Covid-19, globally and domestically, Analyst at GTI expect sentiment on the local bourse to remain subdued in this week.

“Nonetheless, we believe the current attractive valuation of many fundamentally viable stocks in the Nigerian market offers a potential medium-to-long term alpha return to desiring investors.”

Cordros Capital analysts expect the local bourse to close in red territory amid low crude oil prices. “As more state governors take stricter measures to strengthen social distancing mandate, we expect share prices to moderate. Notwithstanding, we expect investors to take position in companies with high beta and dividend yield,” they advised.