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With Local Content, Strong Economy is Possible

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yemi osinbajo
  • With Local Content, Strong Economy is Possible

The failure of the leadership to maximise Nigeria’s enormous potential has been making the country suffer different economic woes.

Right now, Nigeria is wrestling with recession. And not a few actual and perceived economists have employed different nomenclatures like compression and depression to illustrate the state of the economy, while also making projections on where the country will be if the current negative economic trend continues.

Therefore, Nigeria requires diverse activities that are well situated to fuel the economy for a quick recovery from the current quagmire it’s in.

And to address the myriads of problems it presently faces, suggestions from some tested experts both from within and outside of the country have largely been in favour of aggressive reform of institutions and provision of enabling grounds for suitable hands to deliver viable economic outputs.

Clearly, the need to accentuate and achieve these critical national objectives can be identified in the theme and structure of the just concluded Nigeria Oil and Gas Conference and Exhibition, famously called NOG, Africa’s leading oil and gas conference which for the past 16 years has been gathering influential operators and relevant stakeholders in the oil and gas sector for development and to deepen business opportunities.

Actually, today’s topic, Fuelling the Economy, was taken from one of NOG’s agenda for this year’s edition. It is a welcome coincidence, you will agree, given the nation’s pressing needs, and the necessity of charting a way forward. Listed under this agenda by the conference organisers are Nigerians whose operations in the oil and gas industry are deemed germane to the solutions that the Nigerian government seeks in moving quickly out of recession.

Dr. Ladi Bada, CEO of Shoreline Natural Resources, Mr. Demola Adeyemo-Bero, managing director of First E&P and Mr. Taofik Adegbite, chief executive officer of Marine Platforms to mention just a few of the top industry players in attendance, were on hand to offer wider perspectives for a good way forward for Nigeria.

Adegbite’s Marine Platforms is a fascinating case study on how well wholly-indigenous Nigerian companies can perform in demonstrating Nigeria’s local capacity and competence in the technical areas of the oil and gas industry; and at the same time, how difficult it is for most Nigerian companies to keep the momentum of success in a business environment that is full of confusing policies and overlapping regulations.

In the first panel discussion, Adegbite duly affirmed the benefit of the Nigerian Local Content law which he said had provided the legal framework that enabled his company and several others to participate fully in the industry and to help retain in Nigeria billions of dollars that were constantly being repatriated from the country by foreigners due to previous lack of acknowledgment of the capability of Nigerians to take the local jobs available in the sector.

Adegbite therefore attributed the tremendous success made by his company, and the massive contribution his firm is making to the Nigerian economy, to the enactment and operation of a law that serves to empower Nigerian people and the economy.

Conversely, the CEO also shared the pains his firm is facing and unusual resilience being put up by his organisation, and possibly other Nigerian companies to remain virile during this tough moment.

And he admonished the government to tidy up its policies and laws so as to create more opportunities than stumbling blocks.

Interestingly, almost all the speakers on the panel, who were carefully drawn to represent the regulators, legislature and the operators, seemed to agree on the major problems plaguing the industry, and slowing down its gains to the country.

Really, the many paradoxes and contradictions in the Nigerian system deserve an urgent elimination for the country to attain greater heights and for the injection of necessary energy into the economy. Contributions from other members especially from those on the side of the government were disturbing as they confirmed the fears of many on the disruptions and uncertainties in the business atmosphere that were perhaps unwittingly created by the government itself.

Representing the Department of Petroleum Resources (DPR), a major regulator of the industry, in the discussion, Ms. Patricia Maseli, expressed frustration on the different means of control of the sector and opined that the various regulatory agencies presently in place need to be streamlined.

Similarly, the head of the Nigerian Content Development and Monitoring Board (NCDMB), the government agency that oversees the local content policy, Mr. Simbi Wabote, raised concern on some of the policies affecting quick attainment of the goals of the NCDMB.

Wabote also cited the example of a ridiculous policy that allows foreign operators to bring vessels in on a Temporary Import Permit (TIP) at a low rate while indigenous vessel owners are made to cough out Full Duty Payment (FDP), a higher cost on their assets.

Strangely, and quite so often, it seems to be quite easy for us to locate the part where the shoe pinches. On the other hand, we are ever so reluctant to undertake the proper action of ditching the discomforting footwear and seeking better replacement.

Of course, we all know before this more difficult time that it takes someone with steely will to function well in Nigeria’s business climate. From appalling infrastructure to needless bureaucracy of company registration procedures, unabated insecurity, the demoralising rigour of accessing funds and to other encumbrances, many potentially viable business initiatives are dead even before starting off.

It is actually quite sickening to imagine that it took continuous intensification of the World Bank’s current poor ranking of Nigeria as 169th out of 190 countries on its ease of doing business index to make us sit tight to discuss serious business in all spheres of our development.

Even though Nigerians have seen, quite regularly, lots of sitting for critical national issues which ended as permanently quashing of transformative actions, we can see promise in the decision of the Acting President Yemi Osinbajo, who has been holding fort quite effectively for the President, to recently roll out a 60-day national action plan to strengthen Nigeria’s economy with focus on ease of business for both local and foreign enterprises.

In the same manner, the minister of State for Petroleum Resources, Dr. Ibe Kachikwu and the group managing director of Nigerian National Petroleum Corporation (NNPC) Dr. Maikanto Baru, who both spoke at the NOG, freshly promised to deliver on the rejuvenation of the perennially sickly Nigerian refineries.

For as long as I can recall, Nigerians have been groaning about the deplorable state of the country’s three existing refineries, and its attendant effects on the lives of the masses who are end users of different petroleum products.

But shamefully, despite several previous promises of revamp by the government, the refineries with combined installed capacity of 445, 000 barrels per day, still struggle to churn out just about 21, 000 barrels per day. Nonetheless, Nigerians are still counting on the renewed commitment of Buhari’s administration to deliver change in that aspect, and across all sectors of the economy.

Meanwhile, it should be consistently emphasised that there is actually need for sufficient fuel to power the thinking of the individual behind the country’s policies and regulatory agencies to conduct economic affairs in ways that will deepen more business activities in the country.

And this is because the country is indeed endowed with people with enormous capacity and resources to get the economy on a fast pace.

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

Nigeria’s Crude Oil Production Falls for Second Consecutive Month, OPEC Reports

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Crude Oil

Nigeria’s crude oil production declined for the second consecutive month in March, according to the latest report from the Organization of Petroleum Exporting Countries (OPEC).

Data obtained from OPEC’s Monthly Oil Market Report for April 2024 reveals that Nigeria’s crude oil production depreciated from 1.322 million barrels per day (mbpd) in February to 1.231 mbpd in March.

This decline underscores the challenges faced by Africa’s largest oil-producing nation in maintaining consistent output levels.

Despite efforts to stabilize production, Nigeria has struggled to curb the impact of oil theft and pipeline vandalism, which continue to plague the industry.

The theft and sabotage of oil infrastructure have resulted in significant disruptions, contributing to the decline in crude oil production observed in recent months.

The Nigerian National Petroleum Company Limited (NNPCL) recently disclosed alarming statistics regarding oil theft incidents in the country.

According to reports, the NNPCL recorded 155 oil theft incidents within a single week, these incidents included illegal pipeline connections, refinery operations, vessel infractions, and oil spills, among others.

The persistent menace of oil theft poses a considerable threat to Nigeria’s economy and its position as a key player in the global oil market.

The illicit activities not only lead to revenue losses for the government but also disrupt the operations of oil companies and undermine investor confidence in the sector.

In response to the escalating problem, the Nigerian government has intensified efforts to combat oil theft and vandalism.

However, addressing these challenges requires a multi-faceted approach, including enhanced security measures, regulatory reforms, and community engagement initiatives.

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Crude Oil

Oil Prices Edge Higher Amidst Fear of Middle East Conflict

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Crude Oil

Amidst growing apprehensions of a potential conflict in the Middle East, oil prices have inched higher as investors anticipate a strike from Iran.

The specter of a showdown between Iran or its proxies and Israel has sent tremors across the oil market as traders brace for possible supply disruptions in the region.

Brent crude oil climbed above the $90 price level following a 1.1% gain on Wednesday while West Texas Intermediate (WTI) hovered near $86.

The anticipation of a strike, believed to be imminent by the United States and its allies, has cast a shadow over market sentiment. Such an escalation would follow Iran’s recent threat to retaliate against Israel for an attack on a diplomatic compound in Syria.

The trajectory of oil prices this year has been heavily influenced by geopolitical tensions and supply dynamics. Geopolitical unrest, coupled with ongoing OPEC+ supply cuts, has propelled oil prices nearly 18% higher since the beginning of the year.

However, this upward momentum is tempered by concerns such as swelling US crude stockpiles, now at their highest since July, and the impact of a hot US inflation print on Federal Reserve rate-cut expectations.

Despite the bullish sentiment prevailing among many of the world’s top traders and Wall Street banks, with some envisioning a return to $100 for the global benchmark, caution lingers.

Macquarie Group has cautioned that Brent could enter a bear market in the second half of the year if geopolitical events fail to materialize into actual supply disruptions.

“The current geopolitical environment continues to provide support to oil prices,” remarked Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. However, he added, “further upside is limited without a fresh catalyst or further escalation in the Middle East.”

The rhetoric from Iran’s Supreme Leader, Ayatollah Ali Khamenei, reaffirming a vow to retaliate against Israel, has only heightened tensions in the region.

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Commodities

Geopolitical Uncertainty Drives Gold Prices Higher Despite Fed Rate Cut Concerns

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gold bars - Investors King

As tensions simmer in the Middle East and concerns loom over Federal Reserve policy, gold continues its upward trajectory, defying expectations and reinforcing its status as the ultimate safe-haven asset.

The latest surge in gold prices comes amidst escalating geopolitical tensions in the Middle East.

Reports suggest that the United States and its allies are bracing for potential missile or drone strikes by Iran or its proxies on military and government targets in Israel. Such a significant escalation in the six-month-old conflict has sent shockwaves through financial markets, prompting investors to seek refuge in gold.

Despite initial setbacks earlier in the week, gold resumed its blistering rally, buoyed by the specter of geopolitical uncertainty.

On Wednesday, the precious metal witnessed its most significant decline in almost a month following a hotter-than-expected US inflation readout.

This unexpected data led traders to recalibrate their expectations for Federal Reserve interest rate cuts this year, causing the yield on 10-year Treasuries to surge above 4.5%.

However, gold’s resilience in the face of shifting market dynamics remains remarkable. Even as concerns mount over the Fed’s rate-cutting trajectory, the allure of gold as a safe-haven asset persists.

Prices hover just shy of a record high reached earlier in the week, propelled by robust buying from central banks.

Market analysts interviewed by Bloomberg anticipate further gains in gold prices, citing continued geopolitical tensions and strong momentum in the market.

The precious metal’s near-20% rally since mid-February underscores its enduring appeal as a hedge against uncertainty and inflationary pressures.

At 9:54 a.m. in Singapore, spot gold rose 0.3% to $2,341.58 an ounce, signaling continued investor confidence in the metal’s resilience.

The Bloomberg Dollar Spot Index, meanwhile, remained relatively unchanged near its highest level since November.

Silver, often considered a bellwether for precious metals, held steady after reaching a three-year high, while platinum and palladium also registered gains.

As the world navigates through a complex web of geopolitical tensions and economic uncertainties, gold remains a beacon of stability in an increasingly volatile landscape.

Its ability to weather market fluctuations and maintain its allure as a safe-haven asset reaffirms its timeless appeal to investors seeking refuge amidst uncertainty.

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