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Shell To Exit All Russian Operations, Including Major Liquefied Natural Gas Plant

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Following the invasion of Ukraine, British publicly traded multinational oil and gas company, Shell Plc has disclosed that it will exit all its Russian operations, including a major liquefied natural gas plant.

This is also the company’s move in becoming the latest major Western energy company to quit the oil-rich country. Recall that the company’s rival, BP plc., also a British multinational oil and gas company, abandoned its stake in Russian oil giant, Rosneft, a development which could cost the British company over US$25 billion (RM105 billion).

BP Plc., like Shell, is one of the world’s seven oil and gas super majors.  It is a vertically integrated company operating in all areas of the oil and gas industry, including exploration and extraction, refining, distribution and marketing, power generation, and trading.

In a statement, Shell Plc. revealed that it will quit the flagship Sakhalin 2 LNG plant in which it holds a 27.5% stake, and which is 50% owned and operated by Russian gas giant Gazprom.

“We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security”, the company’s chief executive, Ben van Beurden said in the statement.

“Our decision to exit is one we take with conviction. We cannot – and we will not – stand by”, he added, describing Russia’s actions as “a senseless act of military aggression which threatens European security”.

Shell, however, said the Russia exit will not affect its plans to switch to low-carbon and renewable energy. Investors King gathered that Shell is working to provide more renewable and low-carbon energy options for customers through investments in wind, solar, electric vehicle charging, hydrogen, and more.

Reuters reports that the company also plans to end its involvement in the Nord Stream 2 Baltic gas pipeline linking Russia to Germany, which it helped finance as a part of a consortium of companies. Shell will also exit the Salym Petroleum Development, another joint venture with Gazprom.

Investors King gathered that Norwegian oil and gas producer, Equinor also announced its exit from Russia on Monday, as it said it would begin the process of divesting from its joint ventures in the country.

Equinor is an international energy company present in almost 30 countries worldwide, including several of the world’s most important oil and gas provinces. Founded in 1972 under the name Den Norske Stats Oljeselskap AS—Statoil (the Norwegian State Oil company), the company is engaged in exploration, development and production of oil and gas, as well as wind and solar power.

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Economy

Federal Government Halts Cooking Gas Export to Lower Local Prices

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cooking gas cylinder

In a bid to stabilize domestic prices and meet rising demand for cooking gas within Nigeria, the Federal Government has announced a temporary halt on the exportation of Liquefied Petroleum Gas (LPG), commonly known as cooking gas.

This decision follows a significant surge in the cost of cooking gas, which has placed a strain on consumers across the country.

According to reports, the halt in LPG export aims to increase the availability of the commodity within Nigeria’s borders, thereby reducing its local price.

The move is part of broader efforts to address the challenges faced by consumers grappling with the high cost of living.

In recent years, the demand for cooking gas has steadily increased in Nigeria, driven by urbanization, population growth, and a shift towards cleaner energy sources.

However, despite being a major producer of LPG, Nigeria has struggled to meet its domestic demand due to insufficient local production and distribution infrastructure.

Data from the Nigerian Midstream Downstream Petroleum Regulatory Authority reveals that while the total consumption of cooking gas in Nigeria has been on the rise, the country has relied heavily on imports to bridge the supply gap.

The recent decision by the government underscores its commitment to prioritizing the domestic market and ensuring that Nigerians have access to affordable cooking gas.

Consumers have been grappling with escalating prices, with reports indicating a significant increase in the cost of refilling a 12.5kg cylinder of cooking gas in major cities like Abuja, Lagos, and Kano.

The decision to halt LPG exports signals a proactive measure by the government to mitigate the adverse effects of rising prices and alleviate the financial burden on households across the nation.

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Manufacturing Sector Records 7.70% Quarter-on-Quarter Growth in Q4 2023

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German manufacturing

In the fourth quarter of 2023, Nigeria’s manufacturing sector grew by 7.70% year-on-year, according to the National Bureau of Statistics (NBS).

The surge in growth reflects a significant uptick from the preceding quarter and underscores the resilience of the manufacturing industry amid economic challenges.

This growth trajectory indicates positive momentum and signals potential opportunities for economic recovery and development.

The manufacturing sector, comprising thirteen key activities ranging from oil refining to motor vehicles and assembly, demonstrated notable dynamism across various subsectors.

This growth surge is attributed to increased production, enhanced operational efficiencies, and strategic investments across the manufacturing value chain.

Despite facing headwinds such as supply chain disruptions and regulatory uncertainties, the sector’s robust performance underscores its pivotal role in driving economic diversification, job creation, and industrialization efforts in Nigeria.

Moving forward, sustaining this growth momentum will require continued policy support, investment in infrastructure, and efforts to address key bottlenecks hindering the sector’s expansion.

By fostering an enabling business environment and promoting innovation and technology adoption, Nigeria’s manufacturing sector can further catalyze inclusive economic growth and contribute significantly to the nation’s development agenda.

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Economy

Nigeria’s GDP Grows by 3.46% in Q4 2023, Driven by Services

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Nigeria’s Gross Domestic Product (GDP) grew by 3.46% in the fourth quarter (Q4) of 2023 on the back of robust performance of the services sector, according to data released by the National Bureau of Statistics (NBS).

The GDP expansion though slightly lower than the 3.52% recorded in the same period of 2022, reflects a positive trajectory for the Nigerian economy amid ongoing challenges.

The growth rate surpassed the 2.54% recorded in the preceding quarter, indicating a rebound in economic activity.

The services sector emerged as the key driver of growth expanding by 3.98% and contributing 56.55% to the overall GDP.

This sector’s resilience underscores its pivotal role in Nigeria’s economic landscape, encompassing diverse industries such as telecommunications, finance, and real estate.

Also, the agriculture sector experienced growth, expanding by 2.10% compared to the same period in 2022.

Meanwhile, the industry sector recorded a notable improvement, growing by 3.86%, a stark contrast to the -0.94% contraction observed in the fourth quarter of 2022.

On an annual basis, Nigeria’s GDP expanded by 2.74% in 2023 compared to 3.10% in the previous year, reflecting sustained but moderated growth.

The positive trajectory in GDP growth reflects resilience in the face of various economic challenges.

However, sustaining and accelerating growth will require continued efforts to address structural bottlenecks, foster investment, and promote inclusive economic policies across sectors.

Nigeria’s Oil Sector Growth

During the fourth quarter of 2023, Nigeria’s oil sector posted a real growth rate of 12.11% year-on-year, signifying a significant improvement from previous periods.

This was driven by the surge in average daily oil production to 1.55 million barrels per day (mbpd), a positive shift in the sector’s performance.

Despite challenges such as global market fluctuations and production constraints, the oil sector contributed 4.70% to the nation’s total real GDP in Q4 2023.

Nigeria’s Non-Oil Sector

Nigeria’s non-oil sector sustained growth momentum, posting a 3.07% real growth rate in Q4 2023.

This growth was primarily attributed to key industries including finance, telecommunications, agriculture, manufacturing, and construction.

Accounting for 95.30% of the nation’s GDP in the same quarter, the non-oil sector continues to drive economic diversification efforts and reduce dependence on oil revenues.

Despite facing challenges, such as infrastructure deficits and regulatory bottlenecks, the sector’s resilience underscores its pivotal role in fostering sustainable economic development and inclusive growth agendas.

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