Economy

FG to Attract $10bn Oil and Gas Investments – Kachikwu

Published

8 years ago

March 1, 2017

minister-of-petroleum-resources-emmanuel-ibe-kachikwu

FG to Attract $10bn Oil and Gas Investments

The Minister of State, Petroleum Resources, Dr Emmanuel Kachikwu, has said that the Federal Government will attract more than $10bn investments to the oil and gas industry in the next five years.

Kachikwu said this on Tuesday in Abuja at the ongoing Nigerian Oil and Gas Conference tagged: “ Reforming and Repositioning the Oil and Gas Industry in Nigeria’’.

He said that the investments would address challenges facing the oil and gas industry, covering pipelines, refineries, gas and power, facility refurbishment and upstream financing.

The minister of state said that the objective was to bridge the infrastructure funding gaps in the Nigerian oil and gas sector.

He said, “Time has come to bring down the cost of crude oil production and have the right incentives.

“Three years ago, we have cost issues, technological issues but not issues of where the money would come from because of crude price regime.

“Between 2015to 2016, we took drastic measures on how to moderate prices, while between July 2016 and now, there have been lots of stability in the downstream economy.

“There are still some challenges but work is in progress.”

Kachikwu said that the major problem in upstream was $6bn Joint Venture (JV) funding debt and other litigations.

He said that an outstanding debt of $5.1bn would be paid over five years through incremental oil production volumes.

According to him, we now have new cash call model that would free government resources and help production stability.

He said, “There are still some governance issues to be addressed but once this is resolved, there is expected to be an improvement in oil production.

“We are left with options of bringing in investors that will help address the over $45bn infrastructure deficit.

“Government wants to be bold enough to take steps that have not been taken before. We have to release our assets to private investors.

“Either gas pipeline, crude pipeline, the time has come to move from government ownership to private ownership for efficiency.”

Kachikwu said that effort is ongoing in addressing the challenges in the Niger Delta region to boost oil production.

He said that government planned to grow oil production to three million barrels per day.

The minister of state said that government had commenced serious engagement with all stakeholders to achieve stability in the Niger Delta region.

He said talked about the Niger Delta crisis and reduced investments by oil firms.

Kachikwu said the cost of production was key and the issue of militancy was also key.

He said, “We have set a target of zero militancy for 2017 and it is achievable due to lots of community-based activities and motivation,’’ the mister of state said.

He said that the acting President had visited three states and was planning to visit Akwa Ibom State soon.

Kachikwu said that the oil sector could not wait for the political sector to find political solutions to issues.

He said, “We have to collaborate with the oil companies, state governments and see how we can capture some benefits that will come from this.

“We have been seeing engagement of youths and we expect more improvement day by day.

“The states must make their mini-economy agenda and they will work with security agencies.”

In his remark, the Secretary-General of the Organisation of Petroleum Exporting Countries, Dr Mohammed Barkindo, commended Nigeria for exiting the Joint Venture Cash Call debt.

Barkindo said that the cash calls “are the counterpart funding which the Federal Government, represented by the Nigerian National Petroleum Corporation, annually pays as its 60 per cent equity shareholding in various oil and gas fields’’.

It is operated by international oil companies in the country for more than four decades and indigenous oil firms and Nigeria owe arrears of $6.8bn.

Barkindo commended Kachikwu for securing the feat on behalf of the government.

He said, “I must single out the frontal approach on the lingering issue of funding our exploration as well as production, the JVC.

“Many of my colleagues, here that we served together, will testify that government after government, regime after regime, we have battled with this issue continuously without solution.

“This is a confession: the day you overcome this issue that had beleaguered this industry as well as government, you made my day.

‘’Same for the day of all participants who knew what the government had battled to stay afloat on the issue of cash-call.

“The approach has been innovative, the solution is very practical.”

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Fed Slashes Interest Rates by 0.5% to Steady Job Market and Inflation

Published

2 days ago

September 18, 2024

Samed Olukoya

The Federal Reserve on Wednesday enacted its first interest rate cut since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market.

With both the jobs picture and inflation softening, the central bank’s Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, affirming market expectations that had recently shifted from an outlook for a cut half that size.

Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.

The decision lowers the federal funds rate to a range between 4.75%-5%. While the rate sets short-term borrowing costs for banks, it spills over into multiple consumer products such as mortgages, auto loans and credit cards.

In addition to this reduction, the committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year, close to market pricing. The matrix of individual officials’ expectations pointed to another full percentage point in cuts by the end of 2025 and a half point in 2026. In all, the dot plot shows the benchmark rate coming down about 2 percentage points beyond Wednesday’s move.

“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.

The decision to ease came “in light of progress on inflation and the balance of risks.” Notably, the FOMC vote was 11-1, with Governor Michelle Bowman preferring a quarter-point move. Bowman’s dissent was the first by a Fed governor since 2005, though a number of regional presidents have cast “no” votes during the period.

“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision.

Trading was volatile after the decision with the Dow Jones Industrial Average jumping as much as 375 points after it was released, before easing somewhat as investors digested the news and considered what it suggests about the state of the economy.

Stocks ended slightly lower on the day while Treasury yields bounced higher.

“This is not the beginning of a series of 50 basis point cuts. The market was thinking to itself, if you go 50, another 50 has a high likelihood. But I think [Powell] really dashed that idea to some extent,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “It’s not that he thinks that’s not going to happen, it’s that he’s not he’s not pre-committing to that to happen. That is the right call.”

The committee noted that “job gains have slowed and the unemployment rate has moved up but remains low.” FOMC officials raised their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June, and lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.

The committee expects the long-run neutral rate to be around 2.9%, a level that has drifted higher as the Fed has struggled to get inflation down to 2%.

The decision comes despite most economic indicators looking fairly solid.

Gross domestic product has been rising steadily, and the Atlanta Fed is tracking 3% growth in the third quarter based on continuing strength in consumer spending. Moreover, the Fed chose to cut even though most gauges indicate inflation well ahead of the central bank’s 2% target. The Fed’s preferred measure shows inflation running around 2.5%, well below its peak but still higher than policymakers would like.

However, Powell and other policymakers in recent days have expressed concern about the labor market. While layoffs have shown little sign of rebounding, hiring has slowed significantly. In fact, the last time the monthly hiring rate was this low – 3.5% as a share of the labor force – the unemployment rate was above 6%.

At his news conference following the July meeting, Powell remarked that a 50 basis point cut was “not something we’re thinking about right now.”

For the moment, at least, the move helps settle a contentious debate over how forceful the Fed should have been with the initial move.

Economy

Condemnations Trail Dangote-NNPCL Fuel Price Deal As Petroleum Crisis Persists

Published

2 days ago

September 18, 2024

Ugwoke Ogbodo

There is widespread condemnation over the fuel price deal by the Dangote Refinery and the Nigerian National Petroleum Company Limited (NNPCL).

This is coming as some Nigerians have said that their hope of easing sigh of relief following the sector’s deregulation appeared to have been dashed as the price of the Premium Motor Spirit (PMS) commonly known as petrol has continued to hit the roof.

For the Minority caucus of the House of Representatives, the N980 per litre of pump price as agreed by NNPCL and Dangote Refinery is outrageous and exploitative.

Chairman of the caucus, Kingsley Chinda, said the development was a burden added to the already struggling Nigerians.

In a statement that he signed, the lawmaker expressed his outrage over the pump price that varies from N950 to N980 and above N1000 per litre depending on the parts of the country.

The statement said, “We find this pricing regime to be not only burdensome but utterly unacceptable, particularly in light of the fact that this fuel is refined locally.”

The lawmaker emphasised that locally refined fuel should be priced significantly lower than imported fuel, as it avoids costs such as landing charges and import duties, insisting that the pricing model was wrong for all intents and purposes.

“It appears Nigerians are unfairly exploited, especially at a time when many are facing severe economic challenges,” he said, urging NNPCL and Dangote Refinery to reconsider their stand in the interest of the poor masses.

The statement warned that allowing the current pricing arrangement to continue would only deepen the economic hardships of millions and erode trust in local refineries’ ability to deliver affordable fuel.

The caucus called on regulatory bodies and the government to urgently review the pricing framework to ensure Nigerians are not subjected to unsustainable fuel prices.

Also reacting, Senior Advocate of Nigeria and human rights activist, Femi Falana, condemned NNPCL for its role in setting the price of petrol, asserting that the actions of state oil companies are illegal and violate the Petroleum Industry Act (PIA).

In a statement, Falana cited Section 205 of the PIA, emphasising that the law requires petroleum prices to be determined by free market forces, not by the NNPCL.

He argued that the company’s involvement in price-setting contradicts the very deregulation process outlined in the law.

Economy

Ubeta Project to Produce 350 Million Standard Cubic Feet of Gas Per Day Once Operational – FG

Published

2 days ago

September 18, 2024

Ugwoke Ogbodo

The Federal Government of Nigeria has said that once the Ubeta gas field is fully operational, it will produce 350 million standard cubic feet of gas per day.

With this dream realised, the Federal Government said the anticipated achievement would enhance energy security, attract investments, and strengthen collaboration with key partners.

This was made known by the Special Adviser to President Bola Tinubu on Energy, Olu Verheijen, at the inaugural US-Nigeria Strategic Energy Dialogue, hosted by the US State Department in Washington, DC.

Recall that the Nigerian National Petroleum Corporation (NNPC) Limited, in partnership with French energy giant TotalEnergies, had in July planned to invest a significant $550 million to develop gas facilities in oil-rich Rivers State.

Verheijen had announced the kickoff of a $550 million upstream gas project between Nigerian National Petroleum Corporation Ltd. (NNPCL) and TotalEnergies for the development of the Ubeta field.

At a luncheon during the dialogue, Verheijen mentioned that the upstream gas project would produce 350 million standard cubic feet of gas per day once operational.

A statement from Morenike Adewunmi, Stakeholder Manager, Office of the Special Adviser to the President on Energy, quoted Ms. Verheijen as informing the gathering that President Bola Tinubu’s major energy reforms since June 2023 have been aimed at enhancing energy security, attracting investments, and strengthening collaboration with key partners, including the US government.

According to her, the reforms have significantly improved the viability of Nigeria’s gas-to-power value chain.

She explained that in support of the reform efforts, the President issued five new executive orders designed to offer fiscal incentives for investment and reduce the cost and time required to finalize and implement contracts for developing and expanding gas infrastructure.

Verheijen said that the directives aim to immediately unlock up to $2.5 billion in new oil and gas investments in the country.

She acknowledged the valuable support of financing and technical partners, including the US government, the World Bank, and the African Development Bank, in efforts to expand electricity access and reliability through both grid and off-grid solutions.