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Nigeria’s Gas Production Rises as Shell Completes Project

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  • Nigeria’s Gas Production Rises as Shell Completes Project

Gas production in Nigeria has gained more momentum following the completion of a key project in the Niger Delta by the Shell Petroleum Development Company of Nigeria Limited Joint Venture.

The SPDC announced on Wednesday that production had commenced at Gbaran-Ubie Phase 2, which would help to boost gas supply to the domestic market and maintain supply to the export market.

Nigeria is Africa’s top oil producer and largest holder of natural gas reserves on the continent, with about 187 trillion cubic feet of proven gas reserves and 600 Tcf of unproven gas reserves. The country, which has the ninth largest gas reserves in the world, is only the 22nd largest producer of natural gas.

The Gbaran-Ubie Phase 2 followed the success of the first phase of the Gbaran-Ubie integrated oil and gas development, which was commissioned in June 2010.

Peak production at Gbaran-Ubie Phase 2 is expected in 2019 with approximately 175,000 barrels of oil equivalent per day, comprising about 864 million standard cubic feet of gas per day and 26,000 barrels of condensate per day, according to the SPDC.

“The latest development at Gbaran-Ubie is a powerful statement on the continuing commitment of the SPDC and our Joint Venture partners to harness Nigeria’s oil and gas resources for the benefit of the country and stakeholders,” the SPDC Managing Director and Country Chair, Shell Companies in Nigeria, Osagie Okunbor, said.

He said the project was delivered safely through an integrated team with a significant engagement and empowerment of community service providers and Nigerian companies.

According to a statement, eighteen wells have been drilled and a new pipeline constructed between Kolo Creek and Soku, which connects the existing Gbaran-Ubie Central Processing Facility to the Soku Non-Associated Gas plant.

It said first gas flowed from the wells in March 2016, with the facilities coming on stream in July 2017.

The Vice-President, Nigeria and Gabon, Shell, Peter Costello, said, “This is exciting news for Nigeria as it signals Shell’s continued strategy of deploying investment and expertise in our areas of strength.

“Our aim is to continue to explore areas of partnership in Nigeria where the right conditions exist and where we can add best value.”

Shell said the Gbaran-Ubie Phase 2 would help to process the condensate from Kolo Creek, Gbaran, Koroama and Epu fields, thereby assisting in reducing the volume of flaring from its operations, adding that the project had contributed to economic development in the Niger Delta and assisted the local community and Nigerian companies.

The oil major said during construction, members of the community and local sub-contractors provided goods and services in line with the provisions of a Global Memorandum of Understanding.

It said training was also provided to the community in pipeline maintenance, scaffolding, welding and piping fabrication.

The SPDC is the operator of the JV involving the Nigerian National Petroleum Corporation, SPDC, Total E&P Nigeria Limited and Eni subsidiary, the Nigerian Agip Oil Company Limited.

The Group Managing Director, NNPC, Dr. Maikanti Baru, had recently said that the corporation’s strategic plan for gas was to deliver five billion scfd to the domestic market by 2020, without losing focus on retaining and expanding the country’s share of the global market.

He said the recent drive by the Ministry of Petroleum Resources and the NNPC to create an enabling environment for growth of the domestic gas market could not be overemphasised.

He said based on a projected domestic gas supply deficit of three billion scfd, the corporation had identified seven critical gas development projects, which could be delivered in the short and medium term to bridge the impending gas supply shortfall.

Baru said, “So far, over 1000km of major gas pipelines have been laid and commissioned; an additional 470km is currently in construction phase while a further 1400km is intended for construction before the end of 2017.

“Also, along with the development of physical infrastructure, commercial frameworks are being put in place to support the growth of the domestic gas market. Progress has also been made in the reduction of flared gas volumes from a peak of 2.5bscfpd a couple of years ago to about a current volume of 700MMscfpd.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Manufacturing Firms Borrowed N570bn from Banks in 2020 – CBN

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Steel Manufacture At Evraz Plc West-Siberian Metallurgical Plant

Manufacturing firms borrowed a total of N570bn from Nigerian banks last year amid the economic fallout of the COVID-19 pandemic.

Banks’ credit to the manufacturing sector rose to N3.19tn as of December 2020 from N2.62tn at the end of 2019, according to the sectoral analysis of banks’ credit by the Central Bank of Nigeria.

The sector received the second biggest share of the credit from the banks after the oil and gas sector, which got N5.18tn as of December.

“The manufacturing sector, which is the engine of sustainable growth, is still struggling with the debilitating impact of the pandemic and is yet to recuperate,” the Director-General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadir, said in January.

MAN, in a January report, revealed that most manufacturers said commercial banks’ lending rates were discouraging productivity in the sector.

The report said 71 per cent of Chief Executive Officers interviewed “disagreed that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.”

It said the cost of borrowing in the country remained at double digits even amidst the reforms meant to culminate in lower rates to engender the country’s economic recovery process.

The report said, “Special single digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.

“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector.”

The report showed that 64 per cent of respondent disagreed that the size of commercial bank loan to manufacturing sector had encouraged manufacturing productivity.

It said the very high presence of the government in the money market, particularly through the sale of treasury bills, had been crowding out the private sector from the market.

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Economy

Nigeria Earns Extra N318.4 Billion as Crude Oil Hits $67/Barrel

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Buhari

FG Generates Additional Income of N318.4 Billion as Crude Oil Hits $67/Barrel

The Federal Government earned an additional N318.36 billion in February following the surge in crude oil price above $60 per barrel.

Brent crude oil, against which Nigerian oil is priced, average $60 throughout the month of February.

In March, it rose to $67 per barrel.

According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, Nigeria’s crude oil price was retained at $40 per barrel for 2021.

However, she said the nation is presently producing below its 2.5 million barrel per day capacity at 1.7mbpd. This, she said includes 300,000bpd condensates.

“Although Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.7mbpd, including about 300,000bpd of condensates, which indicates compliance with OPEC quota,” the finance minister stated.

Going by the number, Nigeria is producing 1.4mbpd of crude oil without condensates, but with an additional $20 revenue when compared to the $40 per barrel benchmark for the year. It means the Federal Government realised an additional income of N318.360 billion or $20 X 1.4mbpd X 30days in the month of February.

Crude oil jumped to $68.54 per barrel on Friday following OPEC+’s decision to role-over production cuts.

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Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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