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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.”

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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South Africa’s Inflation Rate Holds Steady in May

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South Africa's economy - Investors King

South Africa’s inflation rate remained unchanged in May, increasing the likelihood that the central bank will maintain current borrowing costs.

According to a statement released by Statistics South Africa on Wednesday, consumer prices rose by 5.2% year-on-year, the same rate as in April.

The consistent inflation rate is expected to influence the decision of the six-member monetary policy committee (MPC), which is set to meet in mid-July. The current benchmark rate stands at 8.25%, a 15-year high, and has been held steady for six consecutive meetings.

Central Bank Governor Lesetja Kganyago has repeatedly emphasized the need for inflation to fall firmly within the 3% to 6% target range before considering any reduction in borrowing costs.

“We will continue to deliver on our mandate, irrespective of how our post-election politics plays out,” Kganyago stated earlier this month in Soweto. “The only impact is what kind of policies any coalition will propose. If the policies are not sustainable, we might not have investment.”

While money markets are assigning a slim chance of a 25-basis point rate cut in July, they are fully pricing in a reduction by November.

Bloomberg Africa economist Yvonne Mhango anticipates the rate-cutting cycle to begin in the fourth quarter, supported by a sharp drop in gasoline prices in June and a rally in the rand.

The rand has appreciated more than 3% since Friday, following the ANC’s agreement to a power-sharing deal with business-friendly opposition parties and the re-election of President Cyril Ramaphosa.

In May, the annual inflation rates for four of the twelve product groups remained stable, including food and non-alcoholic beverages.

However, transport, alcoholic beverages and tobacco, and recreation and culture saw higher rates. Food prices increased by 4.3% in May, slightly down from 4.4% in April, while transport costs rose by 6.3%, up from 5.7% and marking the highest rate for this category since October 2023.

The central bank’s cautious stance on monetary policy reflects its ongoing concerns about inflation.

Governor Kganyago has consistently voiced worries that the inflation rate is not decreasing as quickly as desired. The MPC’s upcoming decision will hinge on sustained inflationary pressures and the need to balance economic stability with fostering growth.

As South Africa navigates its economic challenges, the steady inflation rate in May provides a measure of predictability for policymakers and investors alike.

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Ghana Reports Strong 4.7% GDP Growth in First Quarter of 2024

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Ghana’s economy showed impressive growth in the first quarter of 2024 with the Gross Domestic Product (GDP) expanding by 4.7% compared to the same period last year, according to Government Statistician Samuel Kobina Annim.

This represents an increase from the 3.8% growth recorded in the previous quarter and should provide a much-needed boost to the ruling New Patriotic Party (NPP) as the nation approaches the presidential elections scheduled for December 7.

The positive economic data comes amidst a challenging backdrop of fiscal consolidation efforts under a $3 billion International Monetary Fund (IMF) rescue program.

The government has been working to control debt through reduced spending and restructuring nearly all of its $44 billion debt.

This includes ongoing negotiations with private creditors to reorganize $13 billion worth of bonds.

The latest GDP figures are seen as a vindication of the NPP’s economic policies, which have been under fire from the main opposition party, the National Democratic Congress (NDC).

The opposition has criticized the government’s handling of the economy, particularly its fiscal policies and the terms of the IMF program, arguing that they have imposed undue hardship on ordinary Ghanaians.

However, the 4.7% growth rate suggests that the measures taken to stabilize the economy are beginning to yield positive results.

Analysts believe that the stronger-than-expected economic performance will bolster the NPP’s position as the country gears up for the presidential elections.

“The growth we are seeing is a testament to the resilience of the Ghanaian economy and the effectiveness of the government’s policies,” Annim stated at a press briefing in Accra. “Despite the constraints imposed by the debt restructuring and IMF program, we are seeing significant progress.”

The IMF program, which is designed to restore macroeconomic stability, has necessitated tough fiscal adjustments.

These include cutting government expenditure and implementing structural reforms aimed at boosting economic efficiency and growth.

The government’s commitment to these reforms has been crucial in securing the confidence of international lenders and investors.

In addition to the IMF support, the government has also been focused on diversifying the economy, reducing its reliance on commodities, and fostering sectors such as manufacturing, services, and technology.

These efforts have contributed to the robust growth figures reported for the first quarter.

Economic growth in Ghana has been uneven in recent years, with periods of rapid expansion often followed by slowdowns.

The current administration has emphasized sustainable and inclusive growth, seeking to ensure that the benefits of economic progress are widely shared across all segments of the population.

The next few months will be critical as the government continues its efforts to stabilize the economy while preparing for the upcoming elections.

The positive GDP growth figures provide a strong foundation, but challenges remain, including managing inflation, creating jobs, and ensuring the stability of the financial sector.

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World Bank Commits Over $15 Billion to Support Nigeria’s Economic Reforms

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The World Bank has pledged over $15 billion in technical advisory and financial support to help the country achieve sustainable economic prosperity.

This commitment, announced in a feature article titled “Turning The Corner: Nigeria’s Ongoing Path of Economic Reforms,” underscores the international lender’s confidence in Nigeria’s recent bold reforms aimed at stabilizing and growing its economy.

The World Bank’s support will be channeled into key sectors such as reliable power and clean energy, girls’ education and women’s economic empowerment, climate adaptation and resilience, water and sanitation, and governance reforms.

The bank lauded Nigeria’s government for its courageous steps in implementing much-needed reforms, highlighting the unification of multiple official exchange rates, which has led to a market-determined official rate, and the phasing out of the costly gasoline subsidy.

“These reforms are crucial for Nigeria’s long-term economic health,” the World Bank stated. “The supply of foreign exchange has improved, benefiting businesses and consumers, while the gap between official and parallel market exchange rates has narrowed, enhancing transparency and curbing corrupt practices.”

The removal of the gasoline subsidy, which had cost the country over 8.6 trillion naira (US$22.2 billion) from 2019 to 2022, was particularly noted for its potential to redirect fiscal resources toward more impactful public investments.

The World Bank pointed out that the subsidy primarily benefited wealthier consumers and fostered black market activities, rather than aiding the poor.

The bank’s article emphasized that Nigeria is at a turning point, with macro-fiscal reforms expected to channel more resources into sectors critical for improving citizens’ lives.

The World Bank’s support is designed to sustain these reforms and expand social protection for the poor and vulnerable, aiming to put the economy back on a sustainable growth path.

In addition to this substantial support, the World Bank recently approved a $2.25 billion loan to Nigeria at a one percent interest rate to finance further fiscal reforms.

This includes $1.5 billion for the Nigeria Reforms for Economic Stabilization to Enable Transformation (RESET) Development Policy Financing, and $750 million for the NG Accelerating Resource Mobilization Reforms Programme-for-Results (ARMOR).

“The future can be bright, and Nigeria can rise and serve as an example for the region on how macro-fiscal and governance reforms, along with continued investments in public goods, can accelerate growth and improve the lives of its citizens,” the World Bank concluded.

With this robust backing from the World Bank, Nigeria is well-positioned to tackle its economic challenges and embark on a path to sustained prosperity and development.

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