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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.”

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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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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