Connect with us

Markets

We Don’t Have Forex to Import Aviation Fuel — Marketers

Published

on

nigerian-civil-aviation-authority-ncaa
  • We Don’t Have Forex to Import Aviation Fuel

The scarcity of aviation fuel in Nigeria may be far from being over as oil marketers have said they do not have enough foreign exchange to import the product.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, in an exclusive interview with our correspondent, said, “As long as we don’t have forex, it becomes difficult for us to import. Give us forex and we will be able to bring more.”

He said the government could not bridge the supply gap for aviation or Jet A1 as done for petrol because of the shortage of forex.

“Government doesn’t have enough. If they give forex to petrol and to aviation fuel, it will affect other sectors. Now, it is even affecting the aviation sector. So, we are saying the government should try and manage it well so that we will have some forex to bring in aviation fuel.”

The MOMAN executive secretary said the arrangement with international oil companies for the provision of forex was for the importation of petrol.

This month, the CBN has asked banks to submit bids for a “special currency auction,” targeting fuel importers to meet demand for matured letters of credit.

The Executive Secretary, Depot and Petroleum Products Marketers Association, Mr. Olufemi Adewole, said the central bank was making effort to provide marketers with forex.

He, however, said the rate at which marketers were getting the funds was quite exorbitant and that was why the price of aviation fuel was high.

“If there is adequate provision of foreign exchange at a reasonable rate that can bring down the price of fuel, then the landing cost will also drop,” he said.

The marketers are also asking the Federal Government to pay them the foreign exchange differentials for the petrol imports they have made.

Olawore said said, “We will be glad if all our outstanding foreign exchange differentials and interests are all paid immediately.

“That will also help us to go to the market to look for forex.”

On May 11, the government announced a new petrol price band of N135 to N145 per litre, which signalled the end of fuel subsidy.

Prior to the increase from N87 per litre, the nation had suffered a prolonged and severe petrol scarcity as marketers complained that they could not access forex to import.

The new price band was based on an exchange rate of N285 against the dollar, reflecting the depreciation of the naira on the black market, where the currency was trading around 320 to the dollar.

The Central Bank of Nigeria on June 20 floated the naira as it abandoned its 16-month-old peg at 197 to the dollar, effectively devaluing the local currency.

In spite of the liberalisation of petroleum products and government intervention to ease marketers’ access to forex, the Nigerian National Petroleum Corporation remains the major importer of fuel, especially the Premium Motor Spirit, popularly known as petrol.

Olawore said when the naira moved from 197 to 285 to a dollar, there was a differential, adding, “When it moved from 285 to 305, there was a differential. Now we are forced to go to the black market, there is a differential.”

He said the price band of N135-145 for petrol covered up to N285/dollar.

“But who gets it at N285? Even the government could not sell to you at 285,” he said.

Fuel shortages often occur in the country during festive periods such as Christmas and Muslim holidays. But there has been no scarcity of petrol this Yuletide.

Commenting on this, Olawore said, “First, the NNPC has imported much. The second reason is that demand has fallen drastically. Demand has fallen nationwide; people that were filling their tanks are no longer doing so.

“So, every marketer is suffering from low demand and because of that the quantity in the market is enough for now.”

He attributed the decline in demand to the recent price hike, saying, “Not many people can afford it.”

On the forex differentials, Adewole said, “We concluded transactions on the PPPRA imports at the rate of N197/dollar. Naira was devalued and it became what it is today. We have Letters of Credit that have matured and that we have not liquidated.

“And because government paid us at the rate of N197/dollar, we are saying that whether the naira is devalued or not, that is the rate at which we must get dollars to liquidate those LCs because that was the basis of their calculation and payment to us.”

He said the payments for the transactions from December 30, 2014 to September 2015 were delayed.

“The government was supposed to pay within 45 days, but this was not done. The naira was devalued and the government has to bear the difference because we submitted our papers but it did not pay. If it had paid as and when due, we might have liquidated all the LCs because the naira component of the products, which we sold is with us in our banks.

“We only need that of the government to add to it and pay the suppliers. So, that foreign exposure to foreign banks through our local banks is still there and we are asking government to give us dollar at N197.

He said the delay in the payment of the outstanding forex differentials was hampering importation “because a lot of marketers’ funds are tied down.”

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.

Continue Reading
Comments

Crude Oil

Aradel Holdings Reports 36% Increase in Crude Oil Production in Q1 2024

Published

on

markets energies crude oil

Aradel Holdings Plc, a prominent player in Nigeria’s energy sector, has announced a significant upswing in its crude oil production, a notable milestone in its operational performance for the first quarter of 2024.

During their 29th Annual General Meeting held in Lagos, Aradel Holdings unveiled that their crude oil production surged by 36% to 13,250 barrels per day compared to the average figures recorded in the previous fiscal year.

This increase underscores the company’s strategic efforts to enhance its production capabilities and optimize operational efficiencies.

Accompanying this impressive growth in crude oil output, Aradel Holdings also reported a substantial rise in gas production, reaching 36.8 million standard cubic feet per day, which reflects a parallel 36% increase from the previous year’s averages.

Despite a slight decrease of 1.6% in refined petroleum products, the overall operational metrics for the first quarter of 2024 showcased robust performance across key production segments.

Chairman of Aradel Holdings, Ladi Jadesimi, emphasized the pivotal role of strategic initiatives implemented in preceding years, which contributed to the company’s exceptional growth trajectory.

“We are pleased with the strides made in Q1 2024, driven by enhanced production volumes and improved operational efficiencies,” stated Jadesimi during the AGM.

He highlighted the successful implementation of the Alternative Crude Evacuation system introduced in 2022, which significantly minimized crude losses and bolstered overall production stability.

In financial terms, Aradel Holdings reported a remarkable 90% increase in revenues for Q1 2024 compared to the same period last year, signaling strong market demand and effective resource utilization strategies.

Moreover, the company achieved a commendable 62% growth in Profit Before Tax (PBT), reinforcing its position as a leading player in Nigeria’s energy landscape.

Commenting on the company’s outlook, CEO and Managing Director Adegbite Falade expressed optimism about Aradel Holdings’ future prospects.

“Our performance in Q1 2024 underscores our commitment to sustained growth and operational excellence,” Falade remarked. “We remain focused on leveraging our strategic advantages and advancing our capabilities to meet evolving market dynamics.”

Aradel Holdings’ stellar performance in Q1 2024 also propelled the company’s market capitalization to exceed N1 trillion, a significant milestone in its corporate history.

This achievement underscores investor confidence and reflects Aradel Holdings’ robust position in the Nigerian stock market.

Looking ahead, Aradel Holdings aims to build upon its Q1 success by further enhancing production capacities, exploring new growth opportunities, and maintaining a steadfast commitment to operational efficiency and sustainability.

Continue Reading

Crude Oil

Nigeria Adds 17 Deep Offshore Blocks to 2024 Oil Licensing Round

Published

on

Lekki Deep Seaport

The Federal Government of Nigeria announced on Tuesday the addition of 17 deep offshore oil blocks to the 2024 Licensing Round for oil fields.

This significant expansion is aimed at enhancing the nation’s crude oil production capacity and attracting more foreign and local investment.

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, disclosed this development during a pre-bid conference held in Lagos.

Komolafe said the decision was part of the commission’s ongoing efforts to derive maximum value from Nigeria’s abundant oil and gas reserves.

“In pursuit of the commission’s commitment to derive value from the country’s abundant oil and gas reserves and increase production, the commission has been working assiduously with multi-client companies to undertake more exploratory activities to acquire more data to foster and encourage further investment in the Nigerian upstream sector,” Komolafe stated.

The new additions come on the heels of recent bids for 12 oil blocks and seven deep offshore assets in the 2024 marginal fields bid round.

This follows the earlier 2022/23 mini-bid round that saw some deep offshore blocks put up for offer.

The Federal Government’s proactive approach signals its determination to capitalize on the country’s hydrocarbon resources.

Komolafe noted that additional data acquired on deep offshore blocks facilitated this expansion. “As a result of additional data acquired in respect of deep offshore blocks, the commission has added 17 deep offshore blocks to the 2024 Licensing Round. Further details on the blocks can be found on the bid portal,” he added.

To accommodate the expanded opportunities, the NUPRC has adjusted the 2024 Licensing Round schedule. The registration and submission of pre-qualification documents, initially set to close on June 25, 2024, has been extended to July 5, 2024.

The data access, purchase, evaluation, and bid preparation phase will commence on July 8, 2024, and close on November 29, 2024, as initially planned.

Komolafe also highlighted the importance of ensuring equitable participation and transparency in the bidding process.

To this end, the commission has sought and received approval from President Bola Tinubu, who also serves as the petroleum minister, to implement attractive fiscal regimes and minimize entry fees for both licensing rounds.

A cap has been placed on the signature bonus payable for the award of the acreages to promote a level playing field for all bidders.

“Since the criteria for the award of the oil blocks are now much more attractive than they initially were during the 2022/23 Mini Bid Round, it is in the interest of equity and fair play to give all investors the same opportunity to bid for the assets,” Komolafe asserted.

Furthermore, the NUPRC announced that the pre-qualified applicants from the 2022/23 Mini Bid Round would not need to undergo a new pre-qualification process for the 2024 Licensing Round. Their technical submissions remain valid, and they are encouraged to re-submit new commercial bids to benefit from the revised, more attractive criteria.

These applicants are also free to bid for the newly offered blocks in the 2024 Licensing Round.

The Federal Government’s expanded licensing round presents a lucrative opportunity for investors to participate in Nigeria’s burgeoning oil and gas sector. With the introduction of these 17 new deep offshore blocks, Nigeria aims to solidify its position as a leading oil producer on the global stage and stimulate economic growth through strategic energy sector investments.

Continue Reading

Crude Oil

Brent Crude Falls to $84.12, WTI Rises to $80.19

Published

on

Brent crude oil - Investors King

In a cautious market, oil prices showed mixed movements in Asian trade on Tuesday.

Global benchmark Brent crude oil, against which Nigerian oil is priced, experienced a slight decline of 13 cents, or 0.15%, to settle at $84.12 per barrel.

Meanwhile, U.S. West Texas Intermediate (WTI) crude oil saw a modest increase of 14 cents, or 0.17% to $80.19 per barrel.

The recent fluctuations come after both benchmarks posted significant gains of around 2% on Monday, marking their highest closing prices since April.

The market’s attention has now shifted back to fundamental factors, which have exhibited signs of softness for some time.

Francisco Blanch, a commodity and derivatives strategist at Bank of America, noted in a client note that global crude oil inventories and refined product storage in key locations such as the United States and Singapore remain elevated.

“The oil market shifted its focus back to fundamentals, which have been soft for some time,” Blanch stated, highlighting the broader concerns about global demand growth.

Data from the first quarter of the year indicated a deceleration in global oil demand growth to 890,000 barrels per day year-on-year, with further slowing likely in the second quarter.

Also, according to the country’s statistics bureau, China’s oil refinery output fell by 1.8% year-on-year in May due to planned maintenance and higher crude costs.

Market participants are also keenly watching for further indications on interest rates and U.S. demand trends, with several U.S. Federal Reserve representatives scheduled to speak later on Tuesday.

Despite the mixed signals, some analysts remain optimistic about the impact of OPEC+ supply cuts.

Patricio Valdivieso, vice president and global lead of crude trading analysis at Rystad Energy, said, “The latest guidance provided by OPEC+, as well as their unchanged 2.25 million barrels per day demand growth outlook, signals a stagnation in oil supply growth for 2024 and an apparent downside risk to production in 2025.”

Valdivieso further noted the disconnect between OPEC+’s demand outlook and those of other agencies, making it challenging to adopt a fully bearish stance on the market.

This sentiment has been reinforced by recent investor behavior, with hedge funds and other money managers purchasing the equivalent of 80 million barrels in key petroleum futures and options contracts over the week ending June 11.

Support for the market has also come from a rebound in refining margins, particularly in Europe and Asia.

Sparta Commodities analyst Neil Crosby pointed out that refining margins at a typical complex refinery in Singapore averaged $3.60 a barrel for June so far, up from $2.66 a barrel in May.

As the market navigates these dynamics, the cautious optimism among investors and analysts suggests a period of continued volatility and adjustment, with fundamental factors and policy decisions playing pivotal roles in shaping future price movements.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending