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Concerns as Nigeria Fails to Attract Big Oil Investments

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  • Concerns as Nigeria Fails to Attract Big Oil Investments

While other African oil-producing countries are gearing up to attract investments, regulatory uncertainty in Nigeria’s oil and gas industry has continued to darken the outlook for big projects in the country.

Several planned deepwater projects in the country, with the potential to bring online almost 1.1 million barrels of new production daily over the next five or more years, have been repeatedly pushed back by the International Oil Companies.

Since February 2012, when the 125,000-bpd Usan deepwater field started production, no major oil field has come on stream in the country.

Total’s $16bn Egina deepwater oilfield project, whose Floating Production, Storage and Offloading vessel recently sailed away from a fabrication and integration yard in Lagos for installation on the field, is expected to add 200,000 bpd to Nigeria’s oil production.

Analysts at PwC, noted in a new report titled ‘Africa’s oil and gas review’, that the industry was still awaiting the passage of the Petroleum Industry Bill.

“The associated uncertainty has likely caused the deferment of Final Investments Decisions for a host of upstream and midstream projects,” they said.

The bill, which seeks to change the organisational structure and fiscal terms governing the industry, suffered setbacks in the 6th and 7th National Assembly.

To fast-track its passage into law, the current National Assembly decided to split the bill into four parts – the Petroleum Industry Governance Bill, Petroleum Industry Administration Bill, Petroleum Industry Fiscal Bill and Petroleum Host Community Bill.

After its passage by both the Senate and the House of Representatives, the PIGB was transmitted to the President for assent in July to enable it to become law but President Muhammadu Buhari declined to assent to the bill.

The Chairman/Chief Executive Officer, International Energy Services Limited, Dr Diran Fawibe, in a telephone interview with our correspondent on Wednesday, noted that the taking of the final investment decisions on the deepwater projects had been very slow.

Projects that have not been sanctioned are Shell’s Bonga South-West and Aparo (225,000bpd) and Bonga North (100,000bpd), ExxonMobil’s Bosi (140,000bpd), Satellite Field Development Phase 2 (80,000bpd) and Uge (110,000bpd), Eni’s Zabazaba-Etan (120,000bpd), and Chevron’s Nsiko (100,000bpd).

Fawibe, a former top executive in the Nigerian National Petroleum Corporation, said Bonga South-West and Zabazaba-Etan were estimated to cost more than $10bn each, adding, “When you have inflows of this magnitude into an industry of a country, of course, that is a big investment.”

He said, “When international oil companies or investors have reservations about the economic condition of a country, the tendency is to delay their decisions. But the government, realising this, would then have to find a way of convincing or wooing them to ensure that they make the decisions in good time. If the oil companies are given incentives to make investments, surely they will do that.”

He noted that a lot of countries had discovered oil, saying the amount of investment that used to come to Nigeria would now have to be shared.

“But our behaviour does not reflect an understanding of that; we behave as if we are the only country in the world. By the time we get to understand that there are other countries competing for the same funds, maybe we will be able to take actions,” Fawibe added.

Commenting on the PIB, he said, “Time is running out, although we still have six or seven months to the end of the tenure of this current administration. If they are determined to do it, they can. And that is the assurance they have been giving, but there is nothing on the ground that will show that indeed they are committed to it.”

Nigeria’s oil and condensate production showed recovery last year and is estimated to remain at the level of two million bpd in 2018, according to Rystad Energy, an oil and gas consulting services and business intelligence data firm.

It said in an October 29, 2018 report, “While Nigeria is not expected to ramp up production further in the future, sanctioned and unsanctioned projects waiting to be put on stream would be able to offset declining volumes from mature fields, keeping oil supply stable.”

“The timely development of these resources is seen as key for maintaining the country’s oil supply. Given the favourable economics of upcoming projects, the development is expected to take place as planned, provided that the political situation does not create disruptions.

“The development of the projects, expected to be sanctioned in the next five years, is further expected to contribute to the growth in the medium and long-term investments in the country.”

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

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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FG Warns Foreign Investors Against Enslaving Nigerians

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FG Warns Foreign Investors Against Enslaving Nigerians

The Federal Government on Monday warned foreign investors against subjecting Nigerians working in their companies to industrial slavery.

The government said the warning became necessary following several complaints against foreign companies maltreating some of their staff.

The Chief Commissioner, Public Complaints Commission, Chile Igbawua, issued the warning during a courtesy call on him by a delegation of Pan Africa United Youth Developments Network who came to lay complaint against some foreign companies allegedly maltreating Nigerians working under them.

The PCC said that it would not allow only its state commissioners to handle the issues due to their magnitude as there had been so many complaints about the ways some of the foreign companies were treating their staff.

At the event, the leader of the delegation, Habib Muhammed, expressed concern over alleged injustice and irregularities perpetrated by some company on Nigeria youths whom they engaged as factory workers.

He called on the Federal Government to look into the alleged slavery and injustice meted on Nigerian youths.

While calling on the foreigners to obey the labour laws of Nigeria, Igbawua said, “Our resources cannot be used to enslave us again.”

He said, “We have labour laws in Nigeria for goodness sake and we also have industrial standards; people working in various industries are entitled to good working conditions and minimum conditions of service.”

He added that the law was clear on the issue of casualisation and should be implemented.

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Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline

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Foreign Direct Investments into China Shot Up by 9% in 2020 to $163 Billion Against 49% US Decline

China had the highest inflow of Foreign Direct Investments (FDI) globally in 2020, surpassing the US which took the lead in 2019.

According to the research data analyzed and published by Comprar Acciones, China’s inflow shot up by 9% to $163 billion up from $140 billion the previous year. Meanwhile, the US had a 49% drop from $251 billion in 2019 to $134 billion.

Based on data from the National Bureau of Statistics, China reported a 2.3% growth in GDP in 2020. It was the only major economy to record a positive growth rate during the year.

Chinese Stock Market Saw 18 Million New Investors in 2020

Global FDI took a hit in 2020, falling by 42% year-over-year (YoY) from $1.49 trillion in 2019 to $859 billion. The figure was 30% lower than the one reported during the 2009 financial crisis.

Developed countries saw the worst performance, sinking by a cumulative 69% YoY to $229 billion. For developing economies, there was a 12% decline of $616 billion. By the end of 2020, developing countries accounted for a 72% share of global FDI, the highest on record. India had the highest growth among top-rated economies, shooting up by 13%.

China bore the brunt of the pandemic much better than its peers, posting a 6.5% GDP growth in Q4 2020. During the year, there were 18.02 million new investors in its mainland stock market, raising the total to 177.77 million. Driving the surge in interest was the stellar performance of Chinese stocks in 2020.

The Shenzen Component grew by 38.7% in 2020, and the CSI 300 increased by 27.2%, compared to the S&P 500’s 16.26% growth. IPO activity also soared, with China and Hong Kong accounting for 40% of global IPO volume in 2020 according to Ernst & Young.

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