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Covid-19 Pandemic And The Future Of Nigeria’s Oil Industry

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Refinery

 

By Chukwunonso Nwobi

There are three issues to consider when looking at the situation of Nigeria’s oil and gas industry ;Production slumps, COVID-19 pandemic and the non passage of PIB in 2021.

 

 

Based on this, it may be safe to conclude that, Nigeria’s oil industry is facing difficult 2021 occasioned by the delay or otherwise failure to implement certain important reforms as well as the impact of the COVID-19 global crisis.

 

 

Based on recent forecast, The Nigerian oil and gas market is expected to register a CAGR of more than 2% during the forecast period of 2021 – 2026.

 

 

However, the country-wide economic impact of COVID-19 global pandemic, crude producers are faced with a decline in both price and demand for crude,  resulting in an oil slump.

 

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In its industry circular of 2020, the Department of Petroleum Resources (DPR) considers the situation occasioned by the COVID-19 pandemic a serious threat and further instructed all operators to limit the number of personnel at project sites. This has the potential of leading to a breach of specific contract terms.

 

 

As we all know, Nigeria is an important oil supplier to the United States who import at between 9-11 percent of its crude oil from Nigeria. According to the International Energy Agency, in 2011, approximately 33 percent of Nigeria’s crude exports were sent to the United States, making Nigeria its fourth largest foreign oil supplier.

 

 

Today, total crude imports into the United States are falling, imports from Nigeria have declined at a steeper rate as the United States import data for the first half of 2012 show that Nigerian crude is down to a 5 percent share of total United States crude imports.

 

 

I most appreciate the fact that Nigeria’s  cessation of the gasoline subsidy is likely to save the country a lot of money, the deregulation of the country’s downstream oil sector was a much-needed change for a country that depends almost entirely on imports for its gasoline, increasing investments in the upstream sector and the development of large-scale and modular refineries in the country.

 

 

Meanwhile, Nigeria’s offshore oil and gas industry continues to expand, even though not very fast, but opening more market opportunities. The growth of Nigeria’s offshore exploration and production activities may likely be attributed to the Government’s efforts of improving the nation’s hydrocarbon industry.

 

 

Unfortunately, Oil and gas production in Nigeria had been hampered by the increasing attack on oil and gas facilities by militants, oil theft has been one of the major issues and resulted in huge losses to operating companies in the country, these and many other factors are likely have a negative impact on the market growth during the forecast period.

 

 

I find it difficult to say this,but it is the simple truth that the Lack of infrastructure, uncertainties in regulations, security concerns and more recently, the COVID-19 have led Nigeria to underutilize its refining capacities, thereby pushing the country to become a net importer of refined petroleum products.

 

 

Presently, Dangote Refinery is in near completion which many expect to become the refining center in Africa ; but given Nigeria’s position of being among the world’s largest oil producing state, is one refinery going to serve the purpose?

 

 

 

 

 

 

Nigeria’s crude and condensate production slumped to around 1.79 million b/d last year from 2.04 million b/d in 2019, according to S&P Global Platts estimates.

 

 

This was the lowest output since 2016 when Niger Delta militants repeatedly attacked key oil infrastructure pushing the country’s production to as low as 1.4 million-1.5 million b/d at points that year.

 

 

President Muhammadu Buhari recently admitted that the country has been suffering heavily following a sharp drop in output and depressed global oil prices.
“We are being squeezed to produce at 1.5 million b/d against a capacity to produce 2.3 million b/d… now the oil industry is in turmoil,”

 

 

In its industry circular of 2020, the Department of Petroleum Resources (DPR) considers the situation occasioned by the COVID-19 pandemic a serious threat and further instructed all operators to limit the number of personnel at project sites. This has the potential of leading to a breach of specific contract terms.

 

 

As we all know, Nigeria is an important oil supplier to the United States who import at between 9-11 percent of its crude oil from Nigeria. According to the International Energy Agency, in 2011, approximately 33 percent of Nigeria’s crude exports were sent to the United States, making Nigeria its fourth largest foreign oil supplier.

 

 

Today, total crude imports into the United States are falling, imports from Nigeria have declined at a steeper rate as the United States import data for the first half of 2012 show that Nigerian crude is down to a 5 percent share of total United States crude imports.

 

 

I most appreciate the fact that Nigeria’s  cessation of the gasoline subsidy is likely to save the country a lot of money, the deregulation of the country’s downstream oil sector was a much-needed change for a country that depends almost entirely on imports for its gasoline, increasing investments in the upstream sector and the development of large-scale and modular refineries in the country.

 

 

Meanwhile, Nigeria’s offshore oil and gas industry continues to expand, even though not very fast, but opening more market opportunities. The growth of Nigeria’s offshore exploration and production activities may likely be attributed to the Government’s efforts at improving the nation’s hydrocarbon industry.

 

 

Unfortunately, Oil and gas production in Nigeria had been hampered by the increasing attack on oil and gas facilities by militants, oil theft has been one of the major issues and resulted in huge losses to operating companies in the country. These and many other factors are likely have a negative impact on the market growth during the forecast period.

 

 

I find it difficult to say this but it is the simple truth that the Lack of infrastructure, uncertainties in regulations, security concerns and more recently, the COVID-19 have led Nigeria to underutilize its refining capacities, thereby pushing the country to become a net importer of refined petroleum products.

 

 

Presently, Dangote Refinery is in near completion which many expect to become the refining center in Africa ; but given Nigeria’s position of being among the world’s largest oil producing state, is one refinery going to serve the purpose?

 

 

It is in my opinion that, Nigeria needs more than just one refinery, and that we dont have to build new ones. We already have refineries, let us revive them again so that together with privately owned like that of Dangote we can become the refining hub in Africa.

 

 

Despite the COVID-19 threats, despite the militancy and oil theft, as well as other challenges, I can see both a bright and difficult future for the Nigeria’s oil and gas industry, depending on how we handle the problems.

 

 

Meanwhile it is also a time for Nigeria to stop over reliance on oil because it’s obvious that proceeds of oil will soon stop funding our numerous needs. For decades we have been living on billions of dollars without knowing; Gold in almost all Northern states, cocoa and timber in almost all southern states vis a vis agricultural opportunity in many parts of the country.

 

 

Alternatively, we need to go back to where we were before the discovery of oil. We have abundant natural resources in various states of the Federation

 

 

However, Nigeria is on the edge of altering refined products’ supply dynamics in the region with the help of the upcoming Dangote Refinery, and it is expected to become the regional refining hub in the coming years.

 

 

Once completed, the country is planning to become the refinery hub in Africa. This, in turn, is expected to attract foreign players to tap into the country’s downstream market in the near future.

 

 

CHUKWUNONSO NWOBI IS A NIGERIAN BUSINESS MAN BASED IN LAGOS.

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How Aliko Dangote supported businesses in Nigeria-Sambajo

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President of the Dangote Group Aliko Dangote has been described as a rare gem and kind hearted industrialist for nurturing trading and commercial activities in North and across Nigeria for almost four decades.

Speaking when he visited the Dangote pavilion at the ongoing Kano International Trade Fair, Alhaji Salisu Sambajo, said: “ I can say confidently that Aliko has been supporting us for the past 40 years, and he has lifted us up when our businesses where going under.”

Mr. Sambajo is a Kano based international business tycoon, and chairman of the Sambajo General Enterprises Limited. He’s considered one of the biggest business names in northern Nigeria.

“Aliko’s support in growing commercial activities in the North and all over the nation cannot be quantified. The history of Nigeria’s commerce, and indeed of industrialization, cannot be completed without his name topping the list. It’s only God that can reward him,” he said.

The business mogul added: “I am telling you this confidently because I am one of the beneficiaries of his generosity. No one can deny his kindheartedness and support, and God is with such people.”

He recalled that Mr. Dangote had committed billions of naira through Bank of Industry for the development of small businesses in Nigeria, adding that the Fund was expected to create one million jobs.

The business mogul also recalled that Mr. Dangote had supported the Federal Government with billions of naira during the 2012 flooding in Nigeria.

“During the Covid-19 pandemic, we read it in the news that Aliko donated billions of naira. All these are coming from one person. Nigeria should be grateful to him,” he said.

He added that: “ Also remember that at the peak of the Boko Haram crisis, Aliko Dangote had donated a housing estate worth billions to the Internally Displaced persons in Borno State. I can go on and on. His interventions are so numerous.”

According to the businessman, “Aliko has since stopped working for himself. All he has been doing is to lift people out of poverty. I remember whenever we recorded losses, Aliko will lift us up again and again. I don’t want to go into specifics. He’s a very kind and generous person. He deserves all our respect and it’s a big honour that God created such a man in Nigeria.”

Mr. Sambajo said it is not for nothing that Mr. Dangote, is Nigeria’s biggest private sector employer.

The business mogul traced relationship with Mr. Dangote to over 40 years, adding that he has been a great philanthropist who has his country and Africa at heart.

Mr. Sambajo described the upcoming Dangote Refinery as a legacy project that will positively impact the country’s economy.

Dangote Group is the major sponsor of the ongoing 44th Kano International Trade Fair.

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Nurturing 30 New Entrepreneurs: Dangote’s Commitment to Nigerian Economy

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The Dangote Cement Plc has announced the creation of 30 new entrepreneurs who are expected to help bolster food production and ginger the Nigerian economy.

The new Chief Executives were graduated weekend following a three-month intensive entrepreneurial and skill acquisition training on poultry farming and business.

President Bola Ahmed Tinubu had advocated for Public Private Partnership during his speech at the recent Nigerian Economic Summit in Abuja.

Speaking at the graduation ceremony, Plant Director of the Dangote Cement Plc at Obajana in Kogi State, Mr. JV Gungune, said the company’s entrepreneurial scheme is a demonstration of the huge corporate support for government and Nigeria.

The Plant Director who was represented by Engr Wale Adisa, A Senior General Manager, said the President and Chief Executive of the Dangote Group, Alhaji Aliko Dangote is one Nigerian who is passionate about Corporate Social Responsibility and philanthropy.

Mr. Gungune told the beneficiaries to leverage on the advantage conferred on them by the scheme, adding that it was a golden opportunity to be selected, trained and empowered.
He said the scheme has become necessary as it was not possible for the company to employ every one.

He said the development was as a result of the peaceful co-existence between the company and the communities, harping on the need for the youth to become skilled, and that the era of certificate was gone.

Representative of the Ministry of Mines and Steel Development in Kogi State Engr Ezekiel Olufemi Olaitan said the government was happy by the series of economic, social activities, and opportunities created by the Dangote Cement Plc, urging the beneficiaries not to disappoint Nigerians.
In his welcome address, General Manager, Community Relations and Special Duties, Mr. Ademola Adeyemi, said the scheme was part of the company’s Corporate Social Responsibility (CSR), adding that, of the 30 participants, 18 were females and 12 were males.
He said the training was conducted by the Kogi State College of Education (Technical), Kabba, on behalf of Dangote Cement Plc.

According to him: “The Dangote Cement PLC, Obajana Plant Empowerment Scheme among many other is aimed at transforming the youth to be skill full, self-reliant and independent. This year 2023 Youth Empowerment Scheme was particularly designed at developing selected youth from each community to be not just farmers in poultry (layer: egg) producer’s but Entrepreneurs in Agricultural Business.

“The programme is equally aimed at eradicating some of the social vices and poverty that have eaten deep into our communities.”

Representative of the Provost of the Kogi State College of Education (Technical), Kabba Dr. Micheal Udoma said the Dangote Cement Plc had empowered the beneficiaries by starter packs, Bags of Grower feed, battery cages, hand gloves, a 60 litre basin, a hand bowl and point of lay birds.

Head of the Dangote Academy, Engr Wale Adedeji advised the new entrepreneurs not to rest on their oars, but keep reinvesting and profit, saying they can learn from the founder of the company, Alhaji Aliko Dangote.

Speaking, the Bajana of Obajana, Dr Idowu Isenibi, expressed optimism that the programme will help in radically transforming the economy of the Obajana communities and Kogi State in general.
In the same vein, the Olu-Apata Dr. Frederick Balogun, thanked the company for the programme, and urged participants to keep investing in the business.
Representative of the graduands, Mr. Alolo Victor Eleojo said they have registered a Cooperative Society to help buoy their financial standing.
“As new CEOs, we have formed a cooperative and do the necessary registrations,” he added.
He promised not to disappoint the Dangote Group and Nigerians as a whole.

Earlier in the cause of the programme starter packs comprising of medications, vitamins, cages, feeds, 50 layers and poultry farms equipment were given to each of the 30 graduands.

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