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$6bn Needed to Fix Refineries, Says NNPC

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  • $6bn Needed to Fix Refineries

About $6bn worth of investment is needed to adequately rehabilitate and revamp the country’s refineries, the Nigerian National Petroleum Corporation has said.

The Group Managing Director, NNPC, Dr. Maikanti Baru, disclosed this as he unveiled the investment opportunities in the Nigerian oil and gas sector to international investors at the ongoing Offshore Technology Conference taking place in Houston, Texas, United States.

Baru, who was represented by the corporation’s Chief Operating Officer, Gas and Power, Mr. Saidu Mohammed, said the plan of the national oil firm was to upgrade the combined capacity of the refineries to 700,000 barrels per day.

The refineries located in Port Harcourt, Warri and Kaduna have a combined nameplate crude oil refining capacity of 445,000bpd, but currently refine far below that.

Baru was quoted in a statement issued on Wednesday by the spokesperson for the NNPC, Ndu Ughamadu, as saying, “For the refineries, our plan is to rehabilitate and revamp our existing four refineries.

“On successful rehabilitation and revamp, our plan is to upgrade their combined nameplate capacity from 445,000bpd to 700,000bpd within the next few years. We will require investments of between $5bn and $6bn.”

Explaining that the NNPC was mindful of the need to construct new refineries, Baru said the big picture was to transit from a net crude oil exporter to a net petroleum product exporter as more value and opportunities abound in the latter.

The GMD noted that the corporation’s presence at the OTC was not only to look out for potential investors, but to search for partners who would deploy their cutting-edge technologies to enable the corporation achieve its goals.

He said the opportunities in Nigeria’s oil sector could be divided into five distinct areas across the value chain, adding that these were upstream oil and gas development, gas infrastructure and power plants, refineries, downstream as well as ventures and new businesses.

He said within the upstream segment, the NNPC planned to increase its oil reserve base to 40 billion barrels by 2020, adding that based on its upstream growth plan, the corporation would raise about $13bn and $16.5bn over the next five years.

Under the gas infrastructure and power plants, he said there were investment opportunities to the tune of between $9bn and $11bn in the oil and gas sector.

The NNPC boss noted that in the downstream segment, there were opportunities in the construction of new crude and product pipelines, pumping station upgrade, revamp of LPG plants, and construction of new LPG storage tanks, filling stations and equipment supply.

“The provision of coastal vessels and tugboats and other ancillary support services are equally areas that will yield high returns on investment. We will require investments of about $3bn in this area,” Baru added.

In the ventures and new business segment, the GMD stated that opportunities existed for the establishment of pipe mills, equipment leasing (rigs, Floating Production Storage and Offloading vessels) and operations and maintenance services.

According to Baru, oil and gas resources will still be relevant in the global energy mix for a very long time to come as inferred from the global demand and supply forecasts.

“The Nigerian petroleum industry remains by far the largest and most vibrant in sub-Saharan Africa, with lots of potential, especially in the deep water and untapped gas resources and refining. We invite you all to come and participate in this process,” the NNPC GMD added.

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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Investment

Escravos Seaport: $27.29 Billion Seaport Project in Jeopardy Amid Bureaucratic Stalemate

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Nigeria is on the brink of losing a $27.29 billion investment earmarked for the development of the Escravos Seaport Industrial Complex (ESIC) in Delta State.

The ambitious project, championed by the Mercury Maritime Concession Company (MMCC) and backed by foreign investors, is stalled due to prolonged delays in securing final governmental approvals.

Rear Admiral Andrew Okoja (rtd), the chairman of MMCC, voiced his concerns during a recent press briefing.

He emphasized the urgency of obtaining the necessary governmental consents, warning that the delay could result in the forfeiture of the crucial investment.

“EDIB International of Hong Kong has expressed readiness to inject $27.29 billion into the deep seaport project located in Escravos. However, without the required approvals from both federal and state governments, we risk losing this investment,” Okoja stated.

The ESIC project is poised to be a significant economic catalyst, promising to transform Delta State and its neighboring regions.

Modeled after the successful Lekki Deep Seaport and Free Trade Zone, the ESIC is expected to spur trade, commerce, and industry across eight states, including the Federal Capital Territory, Abuja.

“This project is not just about developing a seaport; it’s about creating an economic hub that will drive growth and development across a broad spectrum of sectors,” Okoja explained.

In a letter dated January 19, 2024, EDIB International Ltd., through its chairman Kwame Springer, reiterated its commitment to the project. The letter, addressed to MMCC, highlighted the need for a federal government guarantee to protect the investment.

“We require a guarantee from the Nigerian government to secure our investment. The time frame given to secure these approvals is three weeks, beyond which we might have to consider alternative locations for our investment,” the letter stated.

The Escravos Seaport project has seen provisional approvals from both federal and state governments in the past.

In November 2020, the Federal Government granted a provisional approval for a 50-year renewable concession agreement under the Build, Own, Operate, and Transfer (BOOT) model.

Similarly, in May 2022, the Delta State Government agreed to lease 31,000 hectares of land for the project.

Despite these provisional nods, the final approvals remain elusive.

“We have met all regulatory requirements and are ready to proceed. The delay now lies with obtaining the final consent from the government,” Okoja noted.

He urged the federal and state governments to expedite the approval process to avoid losing the investment to other African nations.

The development of the ESIC encompasses not just the construction of a seaport but also the integration of road, rail, and marine connectivity aimed at optimizing cargo flow.

The project includes the construction of the Warri-Sapele Expressway, linking it to key trade routes.

“This infrastructure will significantly reduce congestion at Lagos ports and open up new economic opportunities for the Niger Delta, Eastern, and Northern States,” Okoja highlighted.

The Escravos Seaport Industrial Complex represents a transformative opportunity for Nigeria’s economic landscape.

However, bureaucratic inertia threatens to derail this landmark project. As the clock ticks, the onus is on the federal and state governments to act swiftly and secure the future of this pivotal investment. Without immediate action, Nigeria stands to lose a monumental opportunity to boost its economy and create thousands of jobs.

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Crude Supply Concerns Stall Nigeria’s Modular Refinery Construction Projects

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The ambitious plans for constructing modular refineries across Nigeria, aimed at bolstering domestic refining capabilities, are encountering significant roadblocks due to apprehensions surrounding crude oil supply guarantees.

Despite the country’s aspirations to become self-sufficient in refining, the reluctance of international oil companies (IOCs) to commit to supplying crude to these facilities has left many projects hanging in the balance.

Presently, only a handful of the planned 20 modular refineries are operational, with the remaining projects either stalled or facing financial uncertainties.

This predicament stems from investors’ demands for assurances regarding crude oil availability before releasing funds for construction.

Eche Idoko, the publicity secretary of the Crude Oil Refinery Owners Association of Nigeria (CORAN), highlighted the pivotal role of guarantees in securing financing for refinery projects.

He emphasized that without a guarantee of feedstock, investors are understandably hesitant to proceed with funding.

Idoko further elucidated that the absence of a regulatory framework mandating IOCs to provide such assurances exacerbates the challenges faced by modular refinery operators.

Despite repeated pleas from industry stakeholders, regulatory bodies have yet to enforce provisions ensuring crude supply to indigenous refiners, adding to the uncertainty surrounding these projects.

The ramifications of this impasse extend beyond the economic realm, as Nigeria’s aspirations to emerge as a regional refining hub are jeopardized.

With the potential to significantly reduce the country’s reliance on imported petroleum products, modular refineries represent a critical component of Nigeria’s energy security strategy.

Furthermore, the synergy between modular refineries and larger-scale projects like the Dangote Petroleum Refinery could position Nigeria as a key player in West Africa’s refining landscape.

By addressing the continent’s substantial deficit in refined petroleum products, Nigeria has the opportunity to assert its leadership in the region’s energy sector.

However, unlocking the full potential of modular refineries hinges on overcoming the current challenges surrounding crude supply guarantees. With concerted efforts from regulatory bodies, IOCs, and industry stakeholders, Nigeria can navigate these obstacles and realize its vision of a vibrant and self-sustaining refining sector.

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CBN to Issue N1.56 Trillion in Treasury Bills for Q3 2024

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The Central Bank of Nigeria (CBN) has unveiled its plan to issue N1.56 trillion worth of treasury bills during the third quarter of 2024.

This strategic move aims to manage inflation, finance the government’s budget deficit, and regulate liquidity in the financial system.

Compared to the N1.56 trillion issued in the second quarter of 2024, the upcoming issuance represents a slight decrease of 4.87 percent.

The allocation breakdown for the treasury bills issuance in Q3 includes N170.85 billion for 91-day tenors, N189.35 billion for 182-day tenors, and a significant portion of N1.20 trillion for 364-day tenors.

Treasury bills issuance is a crucial tool employed by the CBN to influence various aspects of the economy.

By adjusting the supply of money in circulation, managing inflationary pressures, and providing a means for the government to fund its activities, these financial instruments play a pivotal role in shaping economic conditions.

The impact of treasury bill issuance extends to households and individuals, influencing interest rates on savings and investments.

As the yields on treasury bills serve as benchmarks for other interest-bearing assets, changes in these rates can affect returns on savings accounts, fixed deposits, and other investment vehicles, consequently shaping the financial landscape for individuals and families.

Moreover, the issuance of treasury bills contributes to the broader economic environment by supporting price stability and fostering conducive conditions for sustainable economic growth.

By absorbing excess liquidity from the financial system, these bills help mitigate inflationary pressures and create an environment conducive to economic expansion and job creation.

However, amidst these efforts to manage inflation and stabilize the economy, challenges persist, particularly regarding high inflation rates.

Inflation erodes purchasing power, making goods and services more expensive and diminishing the real value of savings.

While the CBN’s initiatives to address inflation through treasury bill issuances are commendable, addressing underlying factors such as supply chain disruptions and fiscal imbalances remains essential for long-term economic stability and improved living standards.

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