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Building Local Capacity as Leeway to Surviving Low Oil Price Regime

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  • Building Local Capacity as Leeway to Surviving Low Oil Price Regime

The challenge of low crude oil prices is seriously affecting the profit of oil companies and revenue of the Federal Government, even as the petroleum industry remained the largest sector and contributor to the Gross Domestic Product (GDP) in the country.

Consequently, some companies in Nigeria have reduced their respectives workforce, cut capital expenditure, suspend or cancel projects.

Patronage of indigenous firms to in the service segment, which were hitherto done by foreign companies are still very low, as over 60 per cent of the major activities such as exploration, drilling, production, well intervention and service provision remain primarily controlled and managed by multi-national oil companies.

Expectations ranging from infrastructural development, political stability, good investment climate, project financing, transparency, high educational standards, legal policy, resource management, research and development, fiscal policy, environmental policy are some of the factors impeding the full participation of indigenous operators in the sector.

As the falling oil price continues to reduce revenue and adversely raising the cost of getting foreign services, indigenous operators like Solewant Nigeria Limited are insisting that building local capacity in the country is the way forward

With the commissioning of its pipe/metals coating facility in Port Harcourt, the country will be able to retain over N50 billion that would have been to get foreign services.”

Speaking at the event, Rivers State Governor, Nyesom Wike, assured of his administration’s commitment to make the state an investor friendly environment, adding that the state government has been supporting oil and gas investment as part of efforts to attract interested companies.

He noted that the administration is committed to pursuing with great vigour concerted efforts aimed at improving the lives of the people and create jobs.

Wike who was represented by the Commissioner for Energy and Natural Resources, Chukwu Shedrack, explained that the state is peaceful and safe for investments, while calling on youths of Alode-Eleme-Onne community to shun violence and embrace peace, “presently, the state government has extended the oil branch to cult groups in the state in order for them to shun violence.

He expressed confidence that the project was conceptualised to save pipeline owners and provide jobs for the youths that are unemployed in the state, adding that the investment is an assurance that private investors can invest in the state.

Chairman of the Solewant Nigeria Limited, Prof. Sylvanus Ebohon, cited backward integration as one of the solutions to the challenges facing the nation in the oil and gas sector, adding that if the nation aspires to drive excellence, there is need to prove value addition in gas project.

He explained that the inauguration is a crystallization of the immense support of the Hon. Minister of State for Petroleum, Dr. Ibe Kachukwu, who encouraged the company to be a key player in the oil and gas sector with its latest technology in pipe coating engineering.

Ebohon stressed that the desire of the company to take a leadership role in the critical aspect of high-grade pipe coating of international standard which it started in 2004, adding that the concept was given life with technical collaboration with Kema Coating of Canada; therefore the drive for excellence has been deliberate.

He added: “This plant is the product of the Local content philosophy of the Federal Government and the new driving principle in the Oil and Gas Sector. We intend to prove that value – addition in the well-being of our economy is a task that must be done through this world – class project. We, therefore, invite the international oil companies and other construction firms to take advantage of the unique and world-class technology that Solewant Pipe Coating Plant offers the Nigerian industrial environment.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

South Africa’s iGas, PetroSA and Strategic Fuel Fund Merge to Create South African National Petroleum Company

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The South African Department of Mineral Resources and Energy (DMRE) has announced the merger of Central Energy Fund (CEF) subsidiaries iGas, PetroSA and the Strategic Fuel Fund (SFF).

The merger will be effective from 1 April 2021 and the new company will be called the South African National Petroleum Company.

The merger, driven by the pursuit of implementing a new company that has a streamlined operating model via the development of a shared services system and a common information platform, comes a few months after cabinet approval and the confirmation that PetroSA had incurred losses of R20 billion since 2014.

Additional factors which prompted the move included the determination to strengthen PetroSA which had not had a permanent CEO in five years prior to the appointment of CEO Ishmael Poolo last and, had become majorly ungainful since its failure to secure gas for the gas-to-liquids refinery project in Mossel Bay.

While the merger deadline has been set, the portfolio committee expressed reservations to the department’s likelihood of meeting the deadline, considering the existing legislative regime, pending issues raised in the SFF and PetroSA forensic reports, as well as PetroSA’s current insolvency and liquidity challenges, the official press statement on the briefing revealed.

“South Africa’s energy sector is entering a new dawn,” said NJ Ayuk, Executive Chairman of the African Energy Chamber. “With gas discoveries off the coast and the announcement of the REIPPP programme bid window 5 and 6 on the horizon, now is the most opportune time for the merger of the CEF subsidiaries. Of course, it is not an easy task and delays may be anticipated but, this move signals a real change towards a meaningful strategy that will not only be beneficial to the DMRE but to potential investors and local development as well.”

The African Energy Chamber welcomes this move and acknowledges that this is yet another step supporting the country’s determination to restarting the engines of sustainable growth and the transformation of energy policy and infrastructure.

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Crude Oil

Crude Oil Hits $71.34 After Saudi Largest Oil Facilities Were Attacked

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Brent Crude Oil Rises to $71.34 Following Missile Attack on Saudi Largest Oil Facilities

Brent crude, against which Nigerian oil is priced, jumped to $71.34 a barrel on Monday during the Asian trading session following a report that Saudi Arabia’s largest oil facilities were attacked by missiles and drones fired on Sunday by Houthi military in Yemen.

On Monday, the Saudi energy ministry said one of the world’s largest offshore oil loading facilities at Ras Tanura was attacked and a ballistic missile targeted Saudi Aramco facilities.

One of the petroleum tank areas at the Ras Tanura Port in the Eastern Region, one of the largest oil ports in the world, was attacked this morning by a drone, coming from the sea,” the ministry said in a statement released by the official Saudi Press Agency.

It also stated that shrapnel from a ballistic missile dropped near Aramco’s residential compound in Eastern Dhahran.

Such acts of sabotage do not only target the Kingdom of Saudi Arabia, but also the security and stability of energy supplies to the world, and therefore, the global economy,” a ministry spokesman said in a statement on state media.

Oil price surged because the market interpreted the occurrence as supply sabotage given Saudi is the largest OPEC producer. A decline in supply is positive for the oil industry.

However, Brent crude oil pulled back to $69.49 per barrel at 12:34 pm Nigerian time because of the $1.9 trillion stimulus packed passed in the U.S.

Market experts are projecting that the stimulus will boost the United States economy and support U.S crude oil producers in the near-term, this they expect to boost crude oil production from share and disrupt OPEC strategy.

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Crude Oil

A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

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Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.

Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.

A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.

One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.

However, Saudi authorities are yet to confirm or respond to the story.

 

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