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Oil Field Owners Urged to Lead Modular Refinery Construction

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  • Oil Field Owners Urged to Lead Modular Refinery Construction

To address the challenges facing modular refinery construction in Nigeria, industry stakeholders have urged indigenous exploration and production companies, which own producing oil fields, to drive the initiative.

Head, Energy Research Desk, Ecobank Plc, Mr. Dolapo Oni, said companies such as Seplat, Shoreline and Neconde should be leading modular refinery development. He noted that any investor, who wants to do modular refinery that would produce different forms of fuel, including aviation kerosene for the purpose of selling locally and for export, will face a big challenge if he is not a crude oil producer.

He said: “If you look at refineries that have been developed in Nigeria that are successful, it is only one – Niger Delta Petroleum Resources Limited (NDPR). They own the field and built their refinery on their field, process their own crude and produce diesel at the rate they sell,” adding that it is the only model that can work for us here.

Oni stressed the need to build refineries that can process crude from anywhere and any type of crude. He said: “You don’t just build refineries that can only process the Nigerian crude,” adding that: “If you are not able to get constant supply of crude, that becomes a challenge to the refinery.”

To him, one of the challenges facing the development of modular refineries in the country is sourcing for funds outside the country. He said Nigerian banks do not have much funds, and are already pressured by existing facilities to the oil and gas sector and cannot expand more.

According to him, only a few of the top banks can provide some lending to the oil and gas sector, and refinery funding will be a challenge locally.

“What it means in getting foreign funding is that you have to look at countries where refineries are gradually declining and they are looking to shift all that investments to somewhere else, countries like France and Italy.

“Also, you look at countries that can provide export credit. For example, you can buy from the United States and they will be able to fund it, so with that you can actually bring it and refine it in Nigeria and, over time, you can pay them back.

“But again, all these things, to some extent, require government’s guarantee as well. Government’s guarantee of crude feedstock was not for free because what some of them are asking is that they want government to guarantee them free crude not that they will not pay, but they will pay after the sale,” he said, adding that it can not work now.

“Government should be able to guarantee that we get the crude to your refinery, but you must pay for the crude when it comes to you,” he insisted.

He continued:“It will be a very big challenge because it means that products from the refineries have to be sold in dollars to foreign countries because you will pay back your funders in dollars.”

Oni said banks were always looking for money to support the industry, adding that they would want to lend if they have the money and as long as the risks could be mitigated. According to him, banks are constantly talking with some foreign banks to complement the opportunity for lending, and more importantly, with participants in the industry.

Ecobank, he said, had championed most of the modular refinery projects that had come up recently, adding it is talking to some of the foreign banks on how to raise money to assist them. “We look for possibilities of putting some money in them in terms of lending. We are trying our best and the best we can do is to talk to other foreign banks to see where we can get money for them,” he added.

On revoking the licences of non-performing modular refineries, the Chairman, Integrated Oil and Gas Limited, Capt. Emmanuel Ihenacho, said the Federal Government should jettison the idea and focus on how to revitalise those refineries for optimum performance.

He said the Department of Petroleum Resources (DPR) should be more concerned with how the operators start refining crude oil in the country and not clamping on them. DPR regulates the activities of the oil and gas industry.

According to him, the DPR was stating the obvious when it said only two out of the 48 modular refinery licensees were working, urging the DPR to temper justice with mercy over licensees whose refineries are yet to begin production.

Speaking at a stakeholders’ forum in Lagos, he said the issue of optimising crude oil processing is what the country needs now and not looking for scapegoats. Many firms have not been able to use their licences due to their inability to get funding from banks and other sources.

Iheanacho said: “It is not that many operators do not want to process crude oil, but they do not have the means to do it. The funds are not just there. The local banks are not ready to provide them facility. When an operator goes to the bank, the banks give excuses. Owning and operating a modular refinery can cost even up to $2billion excluding getting a land for the project and carrying out due process on the project. At a point, the loan seekers would get frustrated by the antics of the banks, and before you know it, the licensee would abandon the idea of operating the refinery.”

He said a modular refinery can be upgraded to suit the needs and the yearnings of its customers, adding that the refinery’s capacity can be upgraded to deliver 20,000 or 50,000 or even 100,000 barrels per day.

Iheanacho said modular refineries have unique features as evident by the ways and manners their sizes and capacities are configured to meet the needs of their operators at any given time.

DPR’s Deputy Director, Mr. Olumide Adeleke, said the government has given operators enough time to plan for the project, stressing that it is in the tradition of the agency to handle issues pertaining to the industry well. He said the government would not hesitate to carry out its oversight functions in the area of maintaining and promoting standards in the sector.

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.

Investment

Union Bank Launches Investment App M36 for Fixed-income Products, Others

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M36, a new digital platform designed to deliver a wide range of investment products directly to individuals, has launched in Nigeria.

Through an innovative, user-friendly app, M36 offers investment options not typically available on self-service digital platforms including foreign currency transactions, commercial papers, local and foreign denominated bonds, treasury bills and other fixed income products.

M36 also offers bespoke solutions for both new and experienced investors as well as a 24-hour lifestyle concierge service to meet the needs of discerning customers.

In a rapidly evolving environment with changing consumer behavior fueled by technology and growing access to information, M36 is looking to expand opportunities for investors at all levels, while also simplifying the process of investing.

M36 was developed by Union Bank as part of its strategic focus on delivering superior customer solutions leveraging technology and innovation.

The Bank partnered with several asset management companies to deliver the broad range of investment products on the M36 platform.

Chuka Emerole, Head, Treasury at Union Bank said about M36:

“M36 eliminates the traditional barriers to investing and offers investors direct access to financial instruments that would usually require the service of an investment or relationship manager.

“We’ve designed M36 to ensure simplicity in the onboarding and investing process while also empowering the customer to make sound investment choices based on their financial objectives.

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United States Firms Operating in Nigeria Plans to Invest $2.4 Billion in Nigeria – Report

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United States Firms Operating in Nigeria Plans to Invest $2.4 Billion in Nigeria – Report

A report compiled by the American Business Council, the United States Embassy, Verraki, KPMG and PwC showed American firms operating in Nigeria plans to invest $2.37 billion in the country in the next three years.

In the 2020 Nigeria Economic Impact Survey, the impact of US firms on the Nigerian economy was analysed while changes in business revenue, foreign investment, job creation, gross value added and plans for expansion were measured.

45 United States companies operating in Nigeria were surveyed and data obtained analysed, according to the report.

The report revealed that US companies in Nigeria created over 30,000 indirect jobs in 2019, a decline from three million in 2018 and over 13,100 direct jobs, down from 18,000 in 2018.

The firms realised N1.08 trillion in revenue in 2019, representing a decline from N1.47 trillion when compared to N1.47 trillion generated in 2018.

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Afreximbank, AAAM to Drive Automotive Investment

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Afreximbank, AAAM to Drive Automotive Investment

The African Export-Import Bank (Afreximbank) and the African Association of Automotive Manufacturers (AAAM) have entered into a Memorandum of Understanding (MoU) for the financing and promotion of the automotive industry in Africa.

President of Afreximbank, Prof. Benedict Oramah and President of AAAM/Managing Director of Nissan Africa, Mike Whitfield, signed the MoU in early February, according to a statement yesterday.

The deal formalised the basis for a partnership aimed at boosting regional automotive value chains and financing for the automotive industry while supporting the development of enabling policies, technical assistance, and capacity building initiatives.

Oramah, said, “the strategic partnership with AAAM will facilitate the implementation of the Bank’s Automotive programme which aims to catalyze the development of the automotive industry in Africa as the continent commences trade under the African Continental Free Trade Area (AfCFTA).”

Under the terms of the MoU, Afreximbank and AAAM will work together to foster the emergence of regional value chains with a focus on value-added manufacturing created through partnerships between global Original Equipment Manufacturers (OEM), suppliers, and local partners.

The two organisations plan to undertake comprehensive studies to map potential regional automotive value chains on the continent in regional economic clusters, in order to enable the manufacture of automotive components for supply to hub assemblers.

“To support the emergence of the African automotive industry, they will collaborate to provide financing to industry players along the whole automotive value chain. The potential interventions include lines of credit, direct financing, project financing, supply chain financing, guarantees, and equity financing, amongst others.

“The MoU also provides for them to support, in conjunction with the African Union Commission and the AfCFTA Secretariat, the development of coherent national, regional and continental automotive policies, and strategies.

“With an integrated market under the AfCFTA, abundant and cheap labour, natural resource wealth, and a growing middle class, African countries are increasingly turning their attention to support the emergence of their automotive industries.

“Therefore, the collaboration between Afreximbank and AAAM will be an opportunity to empower the aspirations of African countries towards re-focusing their economies on industrialisation and export manufacturing and fostering the emergence of regional value chains,” the statement added.

“The signing of the MoU with Afreximbank is an exciting milestone for the development of the automotive industry in Africa. At the 2020 digital Africa Auto Forum, the lack of affordable financing available for the automotive sector was identified as one of the key inhibiters for the growth and development of the automotive industry in Africa and having Afreximbank on board is a game changer and a hugely positive development,” CEO of AAAM, David Coffey said.

“It is wonderful to have a partner that is as committed as the AAAM to driving the development and growth of our sector on the continent; this collaboration will ensure genuine progress for our industry in Africa,” Coffey added.

Other areas covered by the MoU include working with the African Union and the African Organisation for Standardisation to harmonise automotive standards across the continent and developing an automotive focused training program for both the public and private sector.

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