- Indigenous Shipping Firms Crumble Under Loans Burden
More indigenous shipping firms in the country are going under as the ills plaguing the Nigerian economy exacerbate as a result of the recession.
Though many of the Nigerian shipping firms were not doing well but their woes were compounded by downturn in the economy, especially the low price of crude oil in the international market.
Hitherto, these companies had added enormous value to the economy through job and wealth creation, revenue to government-payment of taxes, and levies including cabotage fees.
Though the fate of these companies varies, one of them stood out as a sore thumb in the mouth. Established since 1987 as a wholly owned indigenous company with interests in banking and finance, real estate, agriculture, trading, media and publishing and hospitality, the promoters of the company who preferred anonymity decided to venture into the oil and gas industry in 1997 with the establishment of its shipping division.
Not a few stakeholders in the maritime industry saw the decision as not only bold but also timely considering the niche and absence of local players in the then lucrative industry.
With the support of some financial institutions led by one of the leading banks in the country, Diamond Bank in the past 20 years of existence, the shipping division of the company has continually invested millions of United States of America (USA) dollars in the acquisition of a fleet of state-of-the art ships.
The acquisitions were mainly platform supply vessels (PSV) and security boats of various capacities, sizes and shapes.
In spite of the fact that the shipping division of the company has offered cost effective and quality services to leading multinationals including ExxonMobil, Nigerian Agip Oil Company Limited (NAOC), Total, Addax and other national oil companies, the current challenges facing the oil and gas industry has put local players in distress.
This is not unconnected with the drop in the production level of international oil companies (IOCs) as a result of the fall in crude oil price, militancy in the oil and gas rich Niger Delta region, among other reasons.
Investigations revealed that the situation is so bad that most of the IOCs have off hired vessels of their clients leaving them with no other viable alternative option than to drastically reduce their workforce through dismissal, downsizing and rightsizing.
In some instances, some of these shipping firms have either close shop or at the verge of doing so this year.
Already, some of these companies cannot afford to run their offices any longer not to talk of having funds to maintain the minimum standard of their vessels lying fallow in the ports (due to non- availability of contracts). The sad development has quietly led to mass retrenchment in the oil and gas sector leaving many to join the large army of the unemployed.
This is the reason behind the calls in some quarters for the Federal Government intervention before things totally go out of hand in the shipping sector of the economy.
According to some stakeholders, it will be suicidal if the Federal Government continues to watch the sad trend continue without intervention in the months ahead.
In the light of the foregoing, the commercial banks and other financial institutions, may have to reconsider various options of supporting local companies during this trying time by considering rescheduling payment of outstanding debts which are mostly in USA dollars. Many of these loans were gotten years back when $1 was exchanging for N100 or N160). Presently, $1 is exchanging for N375 and N520, official and black market rate respectively.
Analysts have opined that this is the best time to assess banks on their business friendliness and support even as they pointed out that the once lucrative sector had in the past yielded millions nay billions of naira/dollars for the banks.
Besides the Federal Government intervention, there is urgent need to strictly enforce the provisions of the Cabotage Act 2003. This is the only way to stop the flagrant abuse of the Act with the signing of waivers, the continuous engagement of foreign owned vessels for jobs strictly meant for indigenous ship owners.
Stakeholders including government agencies such as the Nigerian Content Development and Monitoring Board (NCDMB), National Petroleum Investment Management Services (NAPIMS), Nigerian National Petroleum Company (NNPC), Central Bank of Nigeria (CBN), need to come together and deploy resources so as to prevent a bad situation becoming worse in the months ahead.
Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns
Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.
Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.
The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.
This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.
While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.
Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.
Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.
Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.
Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.
Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.
Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.
The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.
However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.
Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.
He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.
Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.
The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.
NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade
The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.
Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.
Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.
In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.
Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.
He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.
Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.
In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.
Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.
The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.
As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.
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