- Floods: Lekki, VI May Lose Attraction, Say Experts
The recent flooding experienced in some parts of the country, especially in Lagos, has raised fears that petroleum products in filling stations’ storage facilities located in the affected areas may have been contaminated.
Real estate experts, including land and estate surveyors and valuers, as well as town planners have said the massive flooding in Lekki, Ajah, Ikoyi and Victoria Island, will lead to a reduction in the appetite of prospective tenants and property buyers.
A top official in one of the fuel marketing companies in Lagos told our correspondent that the fuel in the underground tanks in some of the stations in the affected areas would have been contaminated with water, and this could damage car engines.
“Some stations may not want to go through the process of draining the water. Lekki, Ikoyi and Victoria Island, among others, are prime areas and that is why we have many standard stations along that line. There are stations that sell one truck a day,” the source said.
The Vice President and Head of Energy Research, Ecobank, Mr. Dolapo Oni, noted that most filling stations were using underground tanks to store petroleum products, saying, “The basic worry is how much of the tanks have been affected.
“How much petrol could have been adulterated or contaminated with water? What have stations done to reduce the risk of contamination by water?”
The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, said, “We have our environment, health, safety and quality departments that will look at everything. For major marketers, before we send one litre out, we have made sure that the product meets every standard.
“If any marketer goes to his station after the flood would have receded, he will check everything; no marketer would sell fuel adulterated with water.”
The Vice President, Africa Chapter, International Real Estate Federation, Chief Kola Akomolede, said many people would be discouraged from buying or building properties in flood-prone areas of Lekki, Ikoyi, Victoria Island and others.
He, however, said the floods would have a significant effect on a country with acute shortage of accommodation.
“If it were in a country where there are several other choices, people will move en masse from Lekki and Victoria Island axis. We are not likely to see that kind of movement because there are no alternatives,” Akomolede stated.
According to him, some properties may remain unlet or unsold for some time, because of the flooding issue, adding, “That is supposed to bring down prices or rent.”
The Principal Partner, Ubosi Eleh & Co, an estate surveying and valuation firm, Mr. Chudi Ubosi, said with the flooding, people would worry a lot about buying properties in Lekki and would be a lot more circumspect and careful about what they buy.
“Developers will also be a lot more cautious about development, creating adequate channels as much as they can for water to run off,” he added.
A former President, Association of Town Planning Consultants of Nigeria, Mr. Moses Ogunleye, said the principal cause of the floods in Lagos was non-adherence to the physical development plans that had been prepared for various parts of the state.
He said, “For instance, there is what we call Lekki Infrastructure Master Plan; I am not sure a substantial percentage of that plan was implemented. We have a master plan that the government itself funded and it did not fully implement. The master plan says there should be new roads and drainages, and that canals should be constructed, among others.
“If we had these kinds of rains, that I don’t think were major, and we are having floods, then it means more problems will come.”
Ogunleye added that all the drains in the Lekki corridor should be properly re-emptied, as part of the short-term measures to stem flooding in the area.
“In the medium to long term, let there be a functional drainage system in Lagos,” he said, adding that there would be need for the demolition of some buildings on flood paths.
A surveyor and Managing Director, Lordsfield Limited, Mr. Ropo Olajugba, said, “When you sand-fill swamps and wetlands for construction and everyone filled to his own height, where do you expect the water to go? When yards are floored with cement rather than grass, then you can’t complain of flooding.”
He stressed the need for the country to develop modern flood management skills and techniques, which he said could only be achieved with proven technology.
“All physical development must be referenced to same datum: mean sea level. Meanwhile, a holistic measurement of what is where as presently existing must urgently be made, with a technology called Lidar; this will give a bird’s eye view of the topography of every half a metre space within the region,” Olajugba stated.
He added that blockages would be identified and future single development referencing could be achieved.
African Energy Developments Demand Sustained Investment With New Projects in Mozambique, Tanzania, Uganda, and Senegal
In the past twelve months, the African energy sector has seen several encouraging developments – in the form of both Foreign Direct Investment (FDI) and strategic partnerships – that have advanced the sustainable development of its natural resources. In fact, despite a global downturn in investment in 2020, FDI flows to developing economies accounted for 72% of global FDI, the highest share to date. Given the magnitude of Africa’s oil and gas reserves – not to mention its abundant renewable resource wealth – the continent remains a highly attractive market for inbound investment, which is vital for its growth.
Take Uganda, for instance, which is home to one of the largest onshore discoveries in sub-Saharan Africa. Following multiple petroleum discoveries in Uganda’s Albertine Graben – estimated to contain 6.5 billion barrels of oil, of which 1.4 billion are considered recoverable – foreign investments into the country are expected to reach nearly $20 billion. Last April, Total E&P Uganda B.V. signed a Sale and Purchase Agreement with Tullow Oil PC, through which Total will acquire Tullow’s entire 33.34% interests in Uganda’s Lake Albert development project and the East African Crude Oil Pipeline (EACOP). Five months later, the Ugandan Government and Total signed a host government agreement for EACOP, representing a significant step toward reaching a final investment decision. The deal pushes along an extended development process – slowed by infrastructure issues, tax complications, then COVID-19 – that not only promises to bring first oil by 2022, but also provides a pathway to monetization via associated transport infrastructure.
In addition to developments at Lake Albert, the Ugandan Government has proven its commitment to attracting FDI to its hydrocarbon sector through its second licensing round held last year, as well as its invitation to local and foreign entities to forge joint-venture partnerships with the Government. By prioritizing the establishment of mutually beneficial partnerships, the emerging East African producer aims to facilitate the successful transfer of skills, knowledge and technology, initiating an influx of technical expertise and working capital into the country.
“Those who have been locked out from access to opportunity want the same from the energy sector that the energy sectors want from governments. We must not forget local content, local jobs, local opportunities especially for young people and women” Stated NJ Ayuk Executive Chairman of the African Energy Chamber.
Meanwhile, in West Africa, Senegal has been reaping the rewards of a long-standing partnership with Germany, which has resulted in more than one billion Euros in funding, including significant support for small-scale power plants and renewable energy projects. Holding sizeable potential for solar and wind energy development, Senegal serves as a regional leader in renewable deployment as a means of rural electrification. Indeed, energy is a central component of poverty alleviation across Africa, with electricity access enabling greater independence, clean cooking and potable water, as well as dramatically improving the well-being of individuals, businesses and communities alike. Rural populations are cognizant of the challenges posed by a lack of stable electricity supply – increased urban migration, lack of access to basic services, low economic competitiveness, to name a few – and distributed renewables can represent the fastest and least expensive path to electrification.
European interest in Senegal has shed light on and served as a model for co-operation opportunities between renewable-rich African countries and developed partners, which offer cutting-edge technologies and technical expertise to transform raw resources into viable off-grid and mini-grid solutions.
Furthermore, while the cost of deploying renewable technology has never been lower, the availability of renewable-focused capital has never been higher. Investment in commercial and industrial solar has demonstrated resilience against the pandemic, continuing to be seen as a safe investment in light of rising utility costs and increasing distribution of both solar and financial technologies. Yet resource potential and low costs of equipment are not enough; Senegal and other resource-rich African nations require active investor interest and strong government support to unlock diversified energy mixes. In turn, a lack of investment represents a pointed threat to the achievement of long-term energy security.
“Young people and women have shown their great resilience, and it is our hope we close these deals in the renewable energy sector, Africans can have a sense of some hope that they will be included in the industry contracts and opportunities. It is no longer correct for the African to be the last hired and the first fired” Concluded Ayuk.
Moreover, without sustained levels of FDI continuing to move the needle on oil, gas and renewable developments, energy export revenues run the risk of being stranded and resources left undeveloped. For emerging producers like Uganda – as well as Tanzania, Kenya, Mozambique, among several others – this would mean foregoing critical government revenues that could aid in a much-needed, post-COVID-19 economic recovery. FDI is vital to Africa’s growth, and while it may be challenging to procure capital in a tepid global economy, it is even more difficult not to. Yes, COVID-19 has put emerging producers in a tough spot: new exploration is seen as risky, and new producers lack existing assets or low-cost development of marginal fields on which to fall back. However, it is not an option to slow or postpone time-sensitive developments that promise to harness natural resource wealth and make sustainable improvements in standards of living across the continent. Africa requires a sustained flow of investment and has proven time and again that it offers the scope of projects and magnitude of resources that are worthy of foreign capital.
Saudi Aramco’s Profit Halved in Two Years, Market Cap $210B Below Apple’s
Even before the pandemic, the oil and gas industry was faced with slumping prices. However, with a record collapse in oil demand amid the lockdowns, the COVID-19 crisis has further shaken the market, causing massive revenue and market cap drops for even the largest oil companies.
According to data presented by Finaria.it, the net income of the world’s biggest oil producer and one of the largest publicly listed companies, Saudi Aramco, dropped to $49bn in 2020, a 55% plunge in two years.
The COVID-19 Crisis and Oil Price War Cut Profits by Almost $40B in a Year
In preparation for its IPO, which took place in December 2019, Saudi Aramco had published 2018 profits. With a net income of $111.1bn, Saudi Arabia’s state-run oil giant ranked as the most profitable publicly listed company in the world.
Global macroeconomic concerns like the US-China trade war and the oil overproduction set significant price drops even before the coronavirus outbreak. In 2019, the company reported a profit of $88.2bn, a 20% drop year-over-year.
However, a standoff between Russia and Saudi Arabia in the first months of 2020 sent prices even lower and caused a massive hit for Saudi Aramco’s profits.
After global oil demand plunged in March, Saudi Arabia proposed a cut in oil production, but Russia refused to cooperate. Saudi Arabia responded by increasing production and cutting prices. Shortly Russia followed by doing the same, causing an over 60% drop in crude oil prices at the beginning of 2020. Although OPEC and Russia agreed to cut oil production levels to stabilize prices a few weeks later, the COVID-19 crisis already hit.
In March, Saudi Aramco announced full-year figures for the second time since going public, and the results revealed huge financial losses. In 2020, Saudi Arabia’s state-run oil company reported a net income of $49bn, almost a $40bn drop in a year.
While Saudi Aramco was the most profitable publicly listed company globally in 2019, the current result puts the company behind Apple, which reported a net income of $57.4bn in 2020.
Saudi Aramco’s Market Cap $210B Below Apple’s
In December 2019, Saudi Arabia’s state-run oil giant completed its long-awaited IPO and hit a staggering $2 trillion valuation on the second day of trading, nearly one trillion higher than the world’s next-largest publicly listed companies Microsoft and Apple. The initial public offering was an essential part of Crown Prince Mohammed bin Salman’s Vision 2030 program to transform the Saudi economy.
However, Saudi Aramco’s stocks were outperformed by Apple in 2020. After plunging to $1.61trn in March last year, the market cap of the Dhahran-based company jumped to $2.15trn in September. By the end of the year, this figure slipped to $2.05trn. Statistics show that Saudi Aramco’s market cap floated around this value for the last three months and then dropped to $1.87trn in April after the company revealed the full-year results.
Although valued one trillion less than Saudi Aramco at the time of its IPO, the world’s largest tech company, Apple’s, has seen its market cap surge last year. In January 2020, the combined value of shares of the US tech giant stood close to $1.4trn. After plunging to $1.1trn in March, Apple’s market cap soared to over $2.3trn in December. Although this figure slipped to $2.08trn last week, it still represents almost a 90% increase in a year.
Oil Inches Higher But Rangebound as COVID-19 Cases Soar
Oil prices edged higher in rangebound trade on Monday on optimism about a rebound in the U.S. economy as vaccinations accelerate, but rising COVID-19 cases in other parts of the world kept a lid on prices.
The prices have remained rangebound in the last three weeks, with Brent between $60 and $65 per barrel and WTI at $57 to $62.
“Oil prices are entering a consolidation phase after swinging wildly last month,” Stephen Brennock of oil broker PVM.
“While there are still plenty of reasons to be bullish, market players have become more cautious as infections have surged in Europe, India and some emerging markets, while vaccine rollouts have proved slower than anticipated,” he added.
India now accounts for one in every six daily infections worldwide, and other parts of Asia are seeing infection rates rise.
Asian oil demand remained weak and some buyers asked for lower volumes in May partly because of refinery maintenance and higher prices.
The United States has fully vaccinated more than 70 million people but U.S. gasoline demand has not picked up as much as expected.
The U.S. economy is at an “inflection point” amid expectations that growth and hiring will accelerate in the months ahead, but faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases, Federal Reserve Chair Jerome Powell said in an interview broadcast on Sunday.
“There really are risks out there. And the principal one just is that we will reopen too quickly, people will too quickly return to their old practices, and we’ll see another spike in cases,” Powell said in a CBS interview, recorded on Wednesday.
On the production side, no new oil drilling rigs were started in the United States in the most recent week, a report published by Baker Hughes showed.
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