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Addiction to Fossil Fuels is ‘Mutually Assured Destruction’ – and it Could Hit Your Portfolio Too

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Not only will addiction to fossil fuels drive the world’s “mutually assured destruction,” it could also hit your investment portfolio, warns the CEO of one of the world’s largest independent financial advisory, asset management and fintech organisations.

The warning from Nigel Green of deVere Group, a game-changing global financial giant, comes as UN Secretary General Antonio Guterres said at an event organised by The Economist: “Countries could become so consumed by the immediate fossil fuel supply gap that they neglect or knee-cap policies to cut fossil fuel use.

“This is madness. Addiction to fossil fuels is mutually assured destruction.”

Nigel Green comments: “The Secretary General is, of course, right. The race to replace Russian oil, gas and coal supplies could have catastrophic, irreversible consequences for the planet.

“The international scramble to fill the energy gap is putting in serious jeopardy the essential goal of capping global warming at 1.5 degrees Celsius set out in The Paris Agreement.

“It’s critical that countries around the world continue to work on their reduction of emissions in order that we have any chance of meeting the target of a 45% cut in global emissions by 2030.”

Last year deVere Group joined global financial powerhouses – the world’s two largest credit rating agencies, six major audit networks, three leading index providers, and two global stock exchanges – in becoming a founding member of a new international alliance that will help accelerate the transition to a net zero financial system.

The Net Zero Financial Services Providers alliance joins the Glasgow Financial Alliance for Net Zero, the UN group for financial institutions to make credible net zero commitments through the UN’s Race to Zero project.

The deVere CEO continues: “Hitting the brakes on decarbonisation is not only a serious issue for our planet, it could also hit investors’ portfolios if they move away from sustainable investments.

Impactful investments have been making up an increasingly large proportion of portfolios in recent years. Indeed, they have gone from ‘nice to have’ to a legitimate portfolio diversification tool that delivers profits with purpose.

“This trend should not change in the wake of the current geopolitical issues.  We are in extraordinary times, but these do not last forever – as financial history teaches us – and investments should remain future-focused.

Earlier this month, Nigel Green said the case for green energy being an investment megatrend of the decade has not changed for three key reasons.

First, governments and regulators are becoming increasingly pro-ESG which boosts investor confidence.  Second, as millennials, who are statistically more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth – an estimated $30tn in the next few years – we can expect both retail and institutional investors to continue to pile into ESG. Third, the pandemic focused minds on the fact that the health of our planet directly affects human health which, in turn, affects the way we all live and work.  This global mindset shift represents enormous opportunities for investors.

The deVere CEO concludes: “Investors need to think carefully before rushing to reposition portfolios away from future-focused alternatives in the wake of the Russia-Ukraine situation.

“Climate change remains the greatest risk to economies and communities around the world – and there are major opportunities and high rewards for those who invest in a more sustainable future.”

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Crude Oil

NNPC, Sahara Group To Invest Over N150B in Two Gas Carriers

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Gas Exports Drop as Shell Declares Force Majeure

The Nigerian National Petroleum Company Limited (NNPC) and leading energy conglomerate, Sahara Group have taken delivery of two 23,000 CBM Liquefied Petroleum Gas (LPG) vessels at the Hyundai MIPO Shipyard in Ulsan, South Korea.

The new carriers, the MT BARUMK and MT SAPET, have brought NNPC and Sahara Group’s joint venture investment to over N150 billion ($300 m), bringing the Joint venture’s (JV) gas infrastructure pledge to $1 billion by 2026 closer to reality. MT Sahara Gas and MT Africa Gas were previously part of the fleet. Hyundai MIPO Dockyard, a leading global constructor of mid-sized carriers, produced all four ships.

Recall, Investors King reported that Nigeria earned $868.5 million from gas exports and N13.36 billion from domestic gas sales, according to an examination of the gas revenue statistics and other monthly reports acquired from the Nigerian National Petroleum Company Limited.

Data from the oil firm showed that the Federal Government, through NNPC, garnered the funds from the sale of Natural Gas Liquids/Liquefied Petroleum Gas, as well as Nigeria Liquefied Natural Gas feedstock.

West African Gas Limited (WAGL), a joint venture between NNPC and Oceanbed (a Sahara Group subsidiary), is driving NNPC’s five-year $1 billion investment plan which was announced in 2021, to expedite the decade-long gas and energy transition strategy.

To the joy of visitors, NNPC’s GMD, Mele Kyari, announced that an order for three more new vessels was being finalized, adding, “We have an objective of delivering 10 vessels over the next 10 years. In our energy transformation quest, the NNPC and our partners stand out for their integrity, and our commitment to environmental sustainability is steadfast.”

WAGL and Sahara Group have invested in the JV with MT BARUMK and MT SAPET. WAGL is strengthening its gas fleet and terminal infrastructure, while Sahara Group continues to make significant progress in the development of over 120,000 metric tonnes of storage facilities in 11 African nations, including Nigeria, Senegal, Ghana, Cote d’Ivoire, Tanzania, and Zambia.

“This is another epoch-making achievement for the NNPC and Sahara Group, and we remain firmly committed to delivering more formidable gas projects for the benefit of Nigeria and the entire sub-region,” Kyari said.

Executive Director Sahara Group, Temitope Shonubi stated that “WAGL has successfully operated two mid-sized LPG Carriers MT Africa Gas and MT Sahara Gas in the region in accordance with worldwide standards, transporting over 6 million CBM of LPG across West Africa, with the new vessels, we will be able to accelerate and lead Africa’s energy revolution.”

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NMPRA Set to Draft Six Regulations Governing Operations

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The Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMPRA) has issued six regulations to govern its Midstream and Downstream operations.

This comes on the heels of a sum of N58bn from N500bn bridging claim the Federal Government paid to the Independent Petroleum Marketers of Nigeria (IPMAN)  through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Investors King gathered that an official statement released by the Corporate Communications of NMDPRA noted that the joint agency stated that the amount disbursed to the association is the highest they had paid within six months span by former fund administrators.

Engineer Farouk Ahmed, the Authority’s Chief Executive explained that the aim was to improve business processes, bring clarity, and ease of doing business in the sector. NMDPRA said that it was aware of the matters raised by the petroleum marketers and the difficulties being faced by the association members due to the unpaid N500bn bridging claims.

He explained that a team led by Mr Ogbugo K. Ukoha, Executive Director, Distribution Systems, Storage and Retailing Infrastructure (DSSRI) has been set up to review the draft regulations, and engage and consult stakeholders for smooth implementation when released.

The six regulations include Environmental Management Plan, Gas Pricing, Environmental Remediation Fund, Decommissioning and Abandonment, Gas Infrastructure Fund, and Gas Pipeline Tariff.

“One of our key concerns is boosting local refining. Dangote and BUA refineries are coming on board, however, we want to see more companies investing in refineries so we can stop the importation of refined petroleum products, save our foreign earnings, create jobs and add value to the economy”, Ahmed said.

Ahmed further noted the gradual growth of indigenous players in the local exploration and production of petroleum products.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (Otherwise known as “The Authority”) was created in August 2021 in line with the Petroleum Industry Act 2021 which provides a legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry as well as the development of Host Communities.

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Crude Oil Dips on Prolong Chinese Lockdown

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Global oil prices dipped slightly on Monday as economic reports revealed Chinese retail sales dropped 11% year-on-year in the month of April following the nation’s decision to extend the COVID-19 lockdown to about 46 cities.

Brent crude oil, against which Nigerian oil is priced, dropped to $108.96 per barrel on Monday before rebounding to $112.66 after reports showed Saudi Arabia’s crude oil export declined to 7.235 million barrels per day (mbpd) in the month of March. This represents a decline of 1% from 7.307 million bpd reported in February.

Also, crude oil prices were supported by reports that European Union could reach a deal to impose additional sanctions on Russia for invading Ukraine. According to European Union diplomats and officials, the new sanctions will target Russian crude oil.

However, at Investors King we are expecting the drop in Russia’s crude oil supply to be balanced out by the expected drop in Chinese crude oil imports due to the COVID-19 lockdown. Therefore, will expect oil prices to remain around the current level in the near term.

“With a planned ban by the EU on Russian oil and slow increase in OPEC output, oil prices are expected to stay close to the current levels near $110 a barrel,” said Naohiro Niimura, a partner at Market Risk Advisory.

It is important to note that despite Saudi Arabia’s crude oil exports dropping by 1%, crude oil production jumped to its highest level in about 24 months at 10.300 million bpd, up from 10.225 million bpd produced in the previous month.

Meanwhile, concerns over falling oil inventories in the United States bolstered gasoline futures to an all-time high on Monday.

“Oil prices will remain bullish, especially WTI’s near-term contract, as U.S. gasoline prices continued to rise amid weaker imports of petroleum products from Europe,” said Kazuhiko Saito, chief analyst at Fujitomi Securities.

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