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Nigeria’s Reliance on Imported Fuel Rises

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  • 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.

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.

Economy

Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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Economy

Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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Economy

UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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