- Maritime Industry Spent $3.047bn on Marine Vessels in Four Years
The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, has called on stakeholders in the maritime industry to take advantage of the opportunities in the sector, saying the amount operators spent on marine vessels was $3.047 billion (N1.096 trillion) over the period 2014-2018.
Speaking at the 4th All Nigerian Ship owners Annual Workshop and Dinner held in Lagos recently, he said of the amount, $2.217 billion (N798.12 billion) was spent on category 1 marine vessels, which accounted for 73 per cent of total spend on Marine Vessels (MVs) compared to $393 million or 13 per cent for Category 2 and $437 million or 14 per cent for category 3 vessels.
Category 1 and 2 vessels, the NCDMB boss stated, accounted for 86 per cent of industry spend, adding that industry spend on category 1 vessels was projected to be $1.645 billion or 51 per cent of total amount, compared to $1.043 billion or 33 per cent for Category 2 vessels and $519 million or 16 per cent for Category 3 vessels.
Wabote said Category 1 and 2 vessels accounted for 84 per cent of spend, “and should be focus for vessel ownership. The total spend is projected to be $3.207 billion or $641 million per annum.”
He said: “Top five vessels utilised were Security Patrol Vessels (SPV), Platform Supply Vessels (PSV), Line Handling Tug (LHT), Anchor Handling Tug (AHT), Crew Boats (CB). The five vessels accounted for 49 per cent of vessels utilised. Top five in projected demand will be Various Barges(VB), Tug Boats (TB), Security Patrol Vessels (SPV), Jack-up barges (JUB) and Crew Boats (CB). The five accounted for 66 per cent of vessels that will be required in the years ahead. Water Bus (WB), Support Vessel (SUV) are among the vessels that will be least demanded.
“Category 1 vessels were more in demand accounting for 53 per cent of vessels utilised, Category 2 vessels accounted for 34 per cent. Vessels in category 3 accounted for 12 per cent of vessels utilised. Vessels in Category 1 and 2 accounted for 87 per cent of vessels utilised in the period 2014-2018. Volume of transaction for Category 1 vessels will be higher (49 per cent), compared to categories 2 (23 per cent) and category 3 (28 per cent). Vessels in Category 1 and 2 account for 72 per cent of vessels that will be in demand over the period 2019-2023.”
He stated that progress to address the infrastructure gap is hampered by a shortage of accessible finance and project development expertise.
“The Nigerian Content Intervention Fund was launched in September, 2017. It addresses five key areas namely: manufacturing, asset acquisition, contract financing, community contractor financing scheme and loan re-financing; single digit interest rate (i.e. eight per cent while Community Contractor Financing Scheme is five per cent). The fund has a single obligor limit of up to $ 10 million up to five years duration,” he stated.
The local content board boss also stated that the Bank of Industry (BOI) is also mandated to grow the fund.
The Nigeria maritime sector, he said, continues to grow especially as it pertains to the oil and gas industry.
“The NOGICD Act has provided the framework for inter-agency collaboration and the enabling environment for vessel owners to thrive. The Board continues to implement various data-driven initiatives aimed at sustainable growth of the maritime sector. It is important that key stakeholders are identified and carried along for an all-inclusive support for successful realisation of target objectives. The Ship Owners Association of Nigeria is encouraged to adopt best-in-class stakeholders’ management practice,” he said.
The President of SOAN, Mr Greg Ogbeifun, stated that the association’s engagement with federal government agencies would facilitate the emergence of a competitive Nigerian maritime industry that is at par with other maritime nations and contribute to the growth of the national gross domestic products (GDP).
He stressed the need to consolidate on the gains made so far in order to reposition the maritime and shipping industry as a strategic driver for the national economic development of Nigeria.
Oil Prices Drop on Stronger U.S Dollar
The strong U.S Dollar pressured global crude oil prices on Thursday despite the big drop in U.S crude oil inventories.
The Brent crude oil, against which Nigerian oil is priced, dropped by 74 cents or 1 percent to settle at $73.65 a barrel at 4.03 am Nigerian time on Thursday.
The U.S West Texas Intermediate crude oil depreciated by 69 cents or 1 percent to $71.46 a barrel after reaching its highest since October 2018 on Wednesday.
“Energy markets became so fixated over a robust summer travel season and Iran nuclear deal talks that they somewhat got blindsided by the Fed’s hawkish surprise,” said Edward Moya, senior market analyst at OANDA.
“The Fed was expected to be on hold and punt this meeting, but they sent a clear message they are ready to start talking about tapering and that means the dollar is ripe for a rebound which should be a headwind for all commodities.”
The U.S. dollar boasted its strongest single day gain in 15 months after the Federal Reserve signaled it might raise interest rates at a much faster pace than assumed.
A firmer greenback makes oil priced in dollars more expensive in other currencies, potentially weighing on demand.
Still, oil price losses were limited as data from the Energy Information Administration showed that U.S. crude oil stockpiles dropped sharply last week as refineries boosted operations to their highest since January 2020, signaling continued improvement in demand.
Also boosting prices, refinery throughput in China, the world’s second largest oil consumer, rose 4.4% in May from the same month a year ago to a record high.
“This pullback in oil prices should be temporary as the fundamentals on both the supply and demand side should easily be able to compensate for a rebounding dollar,” Moya said.
Oil Rises as Threat of Immediate Iran Supply Recedes
Oil prices rose on Tuesday, with Brent gaining for a fourth consecutive session, as the prospect of extra supply coming to the market soon from Iran faded with talks dragging on over the United States rejoining a nuclear agreement with Tehran.
Indirect discussions between the United States and Iran, along with other parties to the 2015 deal on Tehran’s nuclear program, resumed on Saturday in Vienna and were described as “intense” by the European Union.
A U.S. return to the deal would pave the way for the lifting of sanctions on Iran that would allow the OPEC member to resume exports of crude.
It is “looking increasingly unlikely that we will see the U.S. rejoin the Iranian nuclear deal before the Iranian Presidential Elections later this week,” ING Economics said in a note.
Other members of the Organization of Petroleum Exporting Countries (OPEC) along with major producers including Russia — a group known as OPEC+ — have been withholding output to support prices amid the pandemic.
“Additional supply from OPEC+ will be needed over the second half of this year, with demand expected to continue its recovery,” ING said.
To meet rising demand, U.S. drillers are also increasing output.
U.S. crude production from seven major shale formations is forecast to rise by about 38,000 barrels per day (bpd) in July to around 7.8 million bpd, the highest since November, the U.S. Energy Information Administration said in its monthly outlook.
Oil Prices Rise as Demand Improves, Supplies Tighten
Oil prices rose on Monday, hitting their highest levels in more than two years supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate.
Brent was up 53 cents, or 0.7%, at $73.22 a barrel by 1050 GMT, its highest since May 2019.
U.S. West Texas Intermediate gained 44 cents, or 0.6%, to $71.35 a barrel, its highest since October 2018.
“The two leading crude markers are trading at (almost) two-and-a-half-year highs amid a potent bullish cocktail of demand optimism and OPEC+ supply cuts,” said Stephen Brennock of oil broker PVM.
“This backdrop of strengthening oil fundamentals have helped underpin heightened levels of trading activity.”
Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks.
The mood was also buoyed by the G7 summit where the world’s wealthiest Western countries sought to project an image of cooperation on key issues such as recovery from the COVID-19 pandemic and the donation of 1 billion vaccine doses to poor nations.
“If the inoculation of the global population accelerates further, that could mean an even faster return of the demand that is still missing to meet pre-Covid levels,” said Rystad Energy analyst Louise Dickson.
The International Energy Agency (IEA) said on Friday that it expected global demand to return to pre-pandemic levels at the end of 2022, more quickly than previously anticipated.
IEA urged the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, to increase output to meet the rising demand.
The OPEC+ group has been restraining production to support prices after the pandemic wiped out demand in 2020, maintaining strong compliance with agreed targets in May.
On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high, Dickson said.
U.S. oil rigs in operation rose by six to 365, the highest since April 2020, energy services company Baker Hughes Co said in its weekly report.
It was the biggest weekly increase of oil rigs in a month, as drilling companies sought to benefit from rising demand.
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