fbpx
Connect with us

Business

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

Published

on

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.

 

General Sani Abacha : The Only Nigeria’s Head Of State Who Attained The Rank Of General Without Skipping A Single Promotion

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.

#

Business

KEDCO Sees Improvement in Financial Performance Following Power Restoration, Appeals for Prompt Payment

Published

on

 

Kano Electricity Distribution Plc. (KEDCO) has reported steady improvements in financial and business performance following the restoration of power supply after a significant blackout during the September-October 2024 billing and collection cycle. This was disclosed in a press statement signed by Sani Bala Sani, Head of Corporate Communication at KEDCO.

According to Sani, the blackout had severely impacted KEDCO and three other distribution companies in the North East and North West regions, with KEDCO being the worst hit. “Recall that KEDCO, alongside three other distribution companies in the North East and North West had significant disruption to power supply in October, with KEDCO being the worst hit,” he stated.

The operations at KEDCO were initially affected on October 13th, 2024, with only 40% of their grid allocation being supplied after the Shiroro-Kaduna 330kV line incident. This situation was exacerbated by a total blackout on October 20th, 2024, during the peak of the revenue collection cycle. “Although the power supply was partially restored to a 40% level on 30th October, we were only availed with up to around 85% supply levels on November 14th and are anxiously awaiting the completion of the Shiroro-Kaduna repairs,” Sani explained.

The blackout resulted in KEDCO’s worst market performance of the year, posing significant financial and economic challenges for both KEDCO and its customers. “Having zero grid supply posed significant financial and economic challenges for KEDCO and its customers, with many customers resorting to costly backup sources or shutting down operations,” Sani noted.

Despite the challenges, KEDCO has seen improvements in power supply, which now stands at around 85%, leading to significant collections from last month’s arrears. Sani urged customers to cooperate by paying their current bills and outstanding arrears promptly to ensure business sustainability. “Thankfully, with the current power supply at around 85%, we have recorded significant collections from last month’s arrears and are appealing to our customers to continue to cooperate with us on prompt settlement of their current bills and arrears, for business sustainability,” he appealed.

#

Sani also commended the resilience of KEDCO’s customers and vowed to continue improving the performance in supplying safe and reliable electricity. “We commend the resilience of our customers and vow to continue to improve our performance in supplying them with safe and reliable electricity,” he said. He thanked the Honourable Minister of Power for his timely intervention and the Transmission Company of Nigeria (TCN) for their restoration efforts. “We equally acknowledge TCN’s restoration efforts and appreciate the Federal Government’s commitment to helping improve the redundancy and safety of the National Grid,” he added.

Looking ahead, KEDCO’s core investor and Board remain committed to driving investments and improving performance through embedded generation supply options via the Safe Grid and Utility 2.0 projects. “It remains our core investor and Board’s resolve to continue to drive investments and improved performance through embedded generation supply options in our network via the Safe Grid and Utility 2.0 projects,” Sani stated.

 

Continue Reading

Business

Lubricants and Nigeria’s economy

Published

on

 

By Cosmas Chukwunonso Nwobi

Every engine depends on oil, which serves as the heat transfer medium and lubricant for moving parts. It stops wears and damages from happening because the moving parts won’t be rubbing against one another.

The primary consumers of engine oil in Nigeria are those who own cars, generators, enterprises, tricycles, and motorcycles. Diesel and gasoline engines both utilize various grades of engine oil. Diesel engine oil is used to maintain heavy vehicles (diesel vehicles), small and large generators, as well as passenger vehicles (light vehicles). Petrol engine oil is used to maintain passenger vehicles (light vehicles).

The overall annual requirement for lubricating oils across the globe is projected to be 50 billion liters, or 60 percent automotive and 40percent industrial. However, industrial lubricants account for more than 70% of total global gross revenues and profit margins.

According to projections, Nigeria, with a gross domestic product of N150 billion in 2013 and more than N450.37 billion by the end of Q1 2021, is the third-largest user of lubricating oils in Africa, consuming 700 million liters of the substance per year (or 1 percent of the global demand).

#

The aggregate profit margins of the blending plants were N45 billion in 2013 and N120 billion in the first quarter of 2021. Their total assets are projected to be worth N20 billion. This indicates that domestic production of lubricating oils meets 75 percent of the country’s total demand, with imports from specialist marketing companies providing the remaining 25percent.

You might also be interested to know that, over the projected period (2021-2026), the market for lubricants in Nigeria is anticipated to develop at a compound annual growth rate (CAGR) of 1.54%, reaching 300,399.52 kilo tons by 2026. which demonstrates that the market for automotive lubricants in Nigeria is anticipated to grow to $683 million by 2023.

This demonstrates that the significance of engine oil cannot be overemphasized and that lubricant production would be a very profitable business endeavor that would considerably boost Nigeria’s economy.

However, this industry was adversely affected by Nigeria’s slowing economic growth. The 2016 recession brought on by the sharp decline in global oil prices was the root cause of the downturn. Oil prices started the year at $36.76 a barrel and reached a high of $54.06 for the year. The lack of foreign exchange had a serious negative impact on the ability of various lubricants manufacturing companies to conduct business and imposed severe costs on key sectors of the country, which further cascaded into all areas of the economy. Given that many players in the industry imported large volumes of base oil and other raw materials needed to blend lubricants at the time, this meant that the shortage of foreign exchange affected all sectors of the economy.

However, the investment landscape is currently changing and Nigeria’s lubricant industry, if properly managed, will surely triple it’s current position in a few years to come. This is due to large oil marketers taking advantage of the lubricants market’s deregulation and lack of significant government intervention.

I commend the effort of the Nigerian Government so far in reducing import charges for Lubricant Blending plants firmly advocate for the need of a driving and I strongly advocate that more can be done in this area since Nigeria’s lubricant business has great prospects for investors. Should we succeed, early investors will also benefit from pioneer status and a five-year tax break.

I firmly believe that better consumer education, cooperation with transportation companies, increased consumer knowledge, and the provision of higher-quality lubricants at lower prices would help Nigeria’s lubricant manufacturers expand and make more money.

Continue Reading

Business

Best choice Specialist Hospital Launches First Intensive Infant Phototherapy Machine In Kano

Published

on

 

_”A Beacon of Progress in Northern Nigeria!”_

In a groundbreaking move, Best Choice Hospital has taken a significant leap forward in pediatric care with the introduction of the Infant Phototherapy Unit, a groundbreaking technology designed to treat jaundice and prevent brain damage in newborns.

In a statement signed by Auwal Muhammad Lawal Group Managing Director of the Hospital noted that pioneering technology enables medical professionals to transfuse blood with unparalleled precision, safety significantly enhancing treatment outcomes for children.

…. Noted that the innovative machine boasts a remarkable 70% radiance output and features a standard phototherapeutic unit, eliminating the need for blood transfusions.

#

Auwal reiterated that introduction of this advanced state-of-art machine marks a significant milestone in Best Choice Hospital’s ongoing commitment to pediatric excellence.

With its advanced capabilities, the Infant Phototherapy Unit can effectively treat jaundice in a targeted manner, providing a beacon of hope for families.

“We understand the distress and hardship that comes with pediatric medical conditions”

“That’s why we’ve invested on this to ease the burden on families and provide children with the best possible chance at a healthy life”. Said Lawal

As the first of its kind in Northern Nigeria, this cutting-edge technology offers a comprehensive treatment solution for infants, covering the entire body with its optimal wavelength.

Dr. Abdulmalik Saminu, a leading medical expert expresses optimism that the development reinforces Best Choice Hospital’s position as a leader in pediatric care, providing families with renewed hope and confidence in the treatment of their loved ones.

Saminu further conveyed heartfelt gratitude to the hospital’s proprietor for his tireless efforts in making this life-changing technology available.

With the Infant Phototherapy Unit, families no longer need to travel abroad for medical treatment, as Best Choice Hospital now offers world-class care right in their own backyard.

Continue Reading

Trending