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Nigeria’s Reliance on Imported Fuel Rises

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Petrol - Investors King
  • Nigeria’s Reliance on Imported Fuel Rises

Oil production from fields in Nigeria in 2018 were 70,166,496 (70 million) barrels more than what were produced in 2017, a report by the Nigerian National Petroleum Corporation (NNPC) has disclosed.

The document titled: “NNPC Monthly Financial and Operations Report,” for the month of January 2019, contained information on the performance of the country’s oil sector for the entire year 2018.

It also showed that while more crude oil was produced, the country equally increased its reliance on imported petrol by extending its annual consumption level between 2017 and 2018 by 6,669,744,749.27 litres (over 6 billion litres).

The report showed that in 2017, Nigeria’s oil production stood at 690,011,529 barrels with an average daily production of 1,890,443 barrels. The figures for 2018 was however reported by the corporation to be 760,178,025 barrels and 1,784,455 barrels as average daily production data.

This, thus indicated a difference in year-to-year production volume of 70,166,496 barrels.

Notwithstanding the positive production strides which the NNPC related with reforms it had emplaced in its businesses in the industry, the report showed that the country could have produced more oil if it did not record some significant setbacks in its oil production.

For instance, it explained that on the Forcados oil terminal, approximately 35,000 barrels a day (bd) of production into it was cut off because the Brass Creek/Trans Ramos Pipeline (TRP) has been shut down since April 24, 2018 due to leaks in a creek crossing in the Odimodi area. The line, it noted has remained shut to date and repairs still ongoing.

Furthermore, it stated that there was a shut-in on Agbami terminal for the repair of faulty flare and cleaning low pressure separator over a period of 24 days in December with 40,000bd of oil not produced, just as 216,000bd of oil were cut back from the Akpo terminal due to power failure over a period of three days.

At Usan terminal, the report noted: “There was plant shut-down for maintenance activity from 23/11/18- 08/12/18 (7 days in December) with production loss of 90,000bpd. Brass terminal: Addax shut-in production for 9 days as the platform stopped delivery into NAOC’s facility due to leakages. The attendant loss was 10,000bpd.”

Again, on the Oyo terminal, the NNPC stated, “there was shut down since 16/03/2018 – date due to technical issues with the only producing well. Shut-in was 5kbd for the 31 days in December 2018.”

It added that on the Qua Iboe terminal, “there was shut down between 1/12/2018 – 7/12/2018 in Asabo and Ekpe field for Distributed Control System/Electronic Safety Shutdown System (ESSDS) upgrade. Total production cut was 231,000 barrels.”

The Escravos terminal it indicated lost 47,000 barrels of oil for 21 days due to maintenance activity on 26” delivery line from Meren/Parabe fields to Escravos, while 20,000 barrels of oil was lost at the Ima terminal over a period of 20 days that there was a controlled process shutdown.

The report stated that for the period under consideration, Nigeria’s reliance on imported petrol increased by over six billion litres, to end at 21,100,118,126.30 over 14,430,373,377.03 that it was in 2017. The petrol volumes were imported through a crude-for-product swap arrangement, while supplies from the local refineries dropped from 1,586,283,202 litres that was recorded in 2017 to 729,214,778 litres in 2018.

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.

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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