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Oil Firms Count Losses as Militants Worsen Woes

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Chevron

Chevron and Eni, two of the global oil majors operating in Nigeria, and their local counterparts such as Seplat and Oando may have been worst hit by the production disruptions occasioned by militant attacks in the Niger Delta, their financial results have shown.

Chevron Corporation, the second largest United States-based oil producer, lost $1.47bn in the second quarter of this year, its largest since 2001, compared with a net profit of $571m in the same period of 2015.

The company said last Friday that its worldwide net oil-equivalent production was 2.53 million barrels per day in the second quarter of 2016, compared with 2.60 million barrels per day a year ago.

It said, “Production increases from project ramp-ups in the United States, Angola, Canada and other areas were more than offset by normal field declines, the effect of asset sales, the Partitioned Zone shut-in, maintenance-related downtime, and the effects of civil unrest in Nigeria.”

Italian oil major, Eni, posted a net loss of €446m in the second quarter of 2016, as against a net profit of €498m in the same period of 2015.

Its oil and gas production fell by 2.2 per cent to 1.715 million barrels of oil equivalent per day, with liquids down by 5.6 per cent at 852,000 bpd.

The Chief Executive Officer, Eni, Claudio Descalzi, said the loss of Nigerian production over the period was 13,000 boepd, adding, “Hydrocarbon production beat expectations, offsetting the suspension of activity in Val d’Agri and the disruptions in Nigeria.”

Two other international oil companies in Nigeria, ExxonMobil Corporation and Royal Dutch Shell Plc, last week reported their lowest quarterly profits since 1999 and 2005, respectively.

Shell, which announced a 72 per cent drop in second-quarter earnings, said its liquids production available for sale in Nigeria plunged by 41 per cent in the second quarter of this year to 37,000 bpd.

Seplat Petroleum Development Company Plc, a major indigenous independent oil and gas company, recorded a net loss of $61m in the first half of the year, for the first time in its six years of operation.

The company said its average working interest production during the first six months was 25,695 boepd, compared to 32,580 boepd in 2015.

It said the reported production figures reflected the longer-than-expected suspension of oil production following the declaration of force majeure at the Forcados terminal by the operator, Shell Nigeria, on February 21 after the disruption in production and exports caused by a spill on the terminal subsea crude export pipeline.

The Chief Executive Officer, Seplat, Mr. Austin Avuru, said the first half results were heavily impacted by events outside of the company’s control.

He said, “The shut-in and suspension of oil exports at the Forcados terminal since mid-February mean we have faced significant challenges in the first half of the year. However, our underlying fundamentals remain strong and we continue to invest to grow our gas business at a rapid rate.”

Oando Plc announced on Tuesday that it made a loss-after-tax of N27bn in the first half of this year, compared to the N35bn lost a year ago.

The company said its daily production volumes dropped to about 45,000 boepd in the first half of this year from about 56,000 boepd in the same period of 2015 as a result of the operating challenges in the Niger Delta.

The Group Chief Executive, Oando, Mr. Wale Tinubu, said, “The first half of the year has attested to the deplorable state of security in the oil and gas environment in Nigeria, having experienced a 25 per cent decline in production volumes arising from the increased disruptions from militant activities.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Guinness Nigeria Postpones Spirits Importation Exit, Extends Deal with Diageo

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Guinness - Investors King

Guinness Nigeria Plc has announced a delay in its plan to halt the importation of spirits as it extended its agreement with multinational alcoholic beverage company Diageo until 2025.

The decision, communicated through a corporate notice filed with the Nigerian Exchange Limited on Tuesday, cited a longer-than-expected transition period for separating its business from Diageo’s.

Initially slated for discontinuation in April 2024, the importation of premium spirits like Johnnie Walker, Singleton, Baileys, and others under the 2016 sale and distribution agreement with Diageo will now continue for an additional year.

The extension comes as the process of business separation between Guinness Nigeria, a subsidiary of Diageo, and Diageo itself faces unexpected delays.

In October, Guinness Nigeria had announced plans to cease importing spirits from Diageo, a move aimed at reducing its foreign exchange requirements.

However, the separation process has encountered unforeseen hurdles, necessitating the extension of the importation agreement.

The notice, signed by the company’s Legal Director/Company Secretary, Abidemi Ademola, highlighted the ongoing efforts by Guinness Nigeria and Diageo to implement the separation, originally scheduled for completion by April 2024.

The extension underscores the complexity of disentangling the businesses and ensuring a smooth transition.

Guinness Nigeria reaffirmed its commitment to the long-term growth strategy, aligning with Diageo’s decision to establish a new, wholly-owned spirits-focused business.

Despite the delay, both companies remain dedicated to managing the importation and distribution of international premium spirits in West and Central Africa, with Nigeria as a key hub.

The postponement comes amid challenges faced by Guinness Nigeria, including significant exchange rate losses, which amounted to N49 billion in the 2023 half-year operations.

Despite these setbacks, the company remains optimistic about its future prospects in the Nigerian market.

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Private Sector Warns: Interest Rate Hike to Trigger Job Cuts and Inflation Surge

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Private employers

As the Central Bank of Nigeria (CBN) announced a hike in the Monetary Policy Rate (MPR) from 22.75% to 24.75%, concerns have been raised by the private sector regarding the potential ramifications on job stability and inflationary pressures.

The move, aimed at curbing inflation and stabilizing the exchange rate, has prompted apprehension among business operators who fear adverse effects on the economy.

Representatives from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigerian Association of Small Scale Industrialists have voiced their worries over the increased difficulty in accessing affordable credit.

They argue that the higher interest rates will impede the private sector’s ability to borrow funds for expansion and operational activities.

This, they fear, could lead to a reduction in business investments and subsequently result in widespread job cuts across various sectors.

The Lagos Chamber of Commerce and Industry (LCCI) acknowledged the necessity of the interest rate hike but emphasized the potential negative consequences it may bring.

While describing it as a “price businesses would have to pay,” the LCCI highlighted the current fragility of the economy, exacerbated by various policy missteps.

They cautioned that the increased cost of borrowing could stifle entrepreneurial activities and discourage expansion plans critical for economic growth and job creation.

Experts have echoed these concerns, warning that the tightening monetary conditions could exacerbate inflationary pressures and hinder economic recovery efforts.

With inflation already soaring at 31.70%, the rate hike could further fuel price hikes, especially in essential goods and services, thus eroding the purchasing power of consumers.

However, CBN Governor Yemi Cardoso defended the decision, citing the imperative to address current inflationary pressures and ensure sustained exchange rate stability.

He emphasized the need to restore the purchasing power of ordinary Nigerians and expressed confidence that the economy would stabilize by the end of the year.

Despite assurances from the CBN, stakeholders remain cautious, calling for a more nuanced approach that balances the need for price stability with the imperative of fostering economic growth and job creation.

As businesses brace for the impact of the interest rate hike, all eyes are on the evolving economic landscape and the measures taken to mitigate its effects on livelihoods and inflation.

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Breaking Barriers: Transcorp Hotels CEO Shares Journey from Crisis to Success

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Dupe Olusola

Dupe Olusola, the Managing Director/CEO of Transcorp Hotels Plc, reflects on her remarkable journey from navigating the depths of a global pandemic to achieving unprecedented success in the hospitality industry.

Appointed in March 2020, amidst the onset of the COVID-19 pandemic, Olusola found herself at the helm of a company grappling with the severe economic fallout and operational challenges inflicted by the crisis.

Faced with a drop in occupancy rates from 70% to a mere 5%, Olusola and her team were confronted with the daunting task of steering Transcorp Hotels through uncharted waters.

Undeterred by the adversity, they embarked on a journey of transformation, leveraging creativity and resilience to navigate the turbulent landscape.

Implementing innovative strategies such as introducing drive-through cinemas, setting up on-site COVID-19 testing facilities, and enhancing take-away services, Transcorp Hotels adapted to meet the evolving needs of its guests and ensure continuity amidst the crisis.

Embracing disruption as a catalyst for growth, Olusola fostered a culture of collaboration and teamwork, rallying her colleagues to overcome obstacles and embrace change.

Through unwavering determination and a commitment to excellence, Transcorp Hotels emerged from the pandemic stronger than ever, breaking profit and revenue records year after year.

“It’s indeed been a great opportunity to learn and relearn, to lead and to grow. When you see success stories, remember it’s a journey with twists, turns, ups and downs but in the end, it will all be okay”, she said.

Olusola’s leadership exemplifies the power of adaptability and perseverance, inspiring her team to transcend limitations and chart a course towards unprecedented success.

As Transcorp Hotels continues to flourish under her stewardship, Olusola remains steadfast in her dedication to driving innovation, fostering growth, and breaking barriers in the hospitality industry.

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