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Nigeria Hopeful Of $32.5b Oil Projects As NNPC Eyes 1.8mb/D In July




• NNPC clears $3.8b JV cash call debt
• NCDMB worries over drop in oil contribution to GDP, revenue 
• Shell, Total, Bayelsa Govt seek speedy implementation of PIA

Nigeria may see the coming on stream of over $32.5 billion worth of oil and gas projects as the Nigeria National Petroleum Company Limited and International Oil Companies operating in the country yesterday show readiness to sign Final Investment Decisions (FIDs) on some projects.

The development is coming as the country is expected to see its oil production rise to 1.8 million barrels per day in July, amidst calls from industry stakeholders for the country to urgently address loopholes in the Petroleum Industry Act (PIA) and immediately finalize the Host Community fragment of the law.
The move also came as NNPC Limited said $3.8 billion has been paid to oil operators in the country to clear all outstanding Joint Venture (JV) cash-call debt.  
The cleared outstanding, according to the NNPC, re-energised the JVs to recalibrate their focus towards sustaining production and increasing their spending to procure the necessary services required to do so.
Gathered in Yenagoa at the Nigerian Oil and Gas Opportunity Fair (NOGOF), organised by the Nigerian Content Development and Monitoring Board (NCDMB), the operators disclosed that Total Energies’ Ubeta, Preowei, Escravos Gas Plant Degasser Project, Chevron’s Agbami, Shell’s Bonga and ExxonMobil’s Owowo are coming on stream this year and would by 2024 push the country’s production to about three million barrels per day.
The concerns for the operators bordered on the need for the Nigerian government to urgently address challenges that diminish the bankability of the country’s energy industry, especially insecurity, crude theft, community issues, poor governance framework, sanctity of contracts, contractor capability, gas fiscals for deepwater and dry gas, projects economics as well as clear operationalization of the PIA fiscal system.
In terms of revenue, investment, production and reserves, the odds have been against Nigeria in the last eight years over investors’ divestment while funds move to other African countries.
The NCDMB at the programme was specifically worried about the declining state of the industry’s contribution to Gross Domestic Product (GDP) even as yearly contribution of oil to aggregate GDP in 2022 was 5.67 per cent compared to 7.24 per cent in 2021 while the sector which used to contribute about 80 per cent of total revenue dropped last year to 41 per cent.  
On the expected oil projects in the sector, Managing Director of Shell, Osagie Okunbor said the company plans $19 billion in the next 10 years, adding that the projects are mainly in the areas of gas and deepwater and would add about 10,000 jobs.

Okunbor said about $3 billion would be spent in capital expenditure to grow domestic gas supply to power industries, petrochemical plants and commercial markets.
According to him, about $4 billion would be spent on onshore gas required to keep NLNG Trains 1-6 full and another $6 billion on shallow water offshore to grow supply to the new NLNG Train 7.  
Okunbor, who put the deepwater spending at $6 billion said the growth is centred on near term opportunities, especially infill projects plus Bonga Main life Extension, midterm opportunities in Bonga North) and long term opportunities in Bonga South West and  Nnwa-Doro.
NNPC Ltd’s Chief Upstream Investment Officer, Bala Wunti, who said the country’s production has risen to 1.5 million barrels per day and would hit budget projections of 1.8 in July, said FIDs are at the verge of being taken on Total Energies’ Ubeta, Preowei, Escravos Gas Plant Degasser Project, Chevron’s Agbami, Shell’s Bonga and ExxonMobil’s Owowo.
The sector is also looking to fully optimise the opportunities in the $3.5bn Agbami oilfield as well as the $10 billion Escravos Gas Plant Degasser Project.
The development, according to Wunti, would increase the nation’s crude oil production to about 3 million barrels per day in the light of the efforts being taken to address security concerns.
He disclosed that the company had leveraged its financial autonomy derived from the PIA to work out and execute a payment plan for the cash call debt while balancing its energy security obligations to the nation.
“This, by no small means, re-energised the JVs to recalibrate their focus towards sustaining production and increasing their spending to procure the necessary services required to do so,” Wunti said.
He noted that the country’s response to the security challenges through the deployment of industry-wide security architecture brought a holistic hydrocarbon infrastructure security architecture to tackle the issue of crude oil theft and vandalism of oil and gas assets.
According to him, the architecture comprises Government Security and Intelligence Agencies (GSIAs) supported by Private Security Contractors (PSCs) drawn from the Host Communities with vast knowledge of the terrains and the Communities.
Wunti added that the security operations are monitored and coordinated from a central command and coordination centre that leverages state-of-the-art technology to detect illegal activities and escalate to the front line for swift response in a timely, cost-efficient, and effective manner. 

Speaking on Upstream Production Cost, he said Nigerian Upstream Cost Optimization Program (NUCOP) has brought synergy amongst upstream players in the country to drive down costs. 
“Progress has been recorded with improvements in the contracting cycle and co-sharing of services amongst upstream operators,” he said.
Wunti noted that the drive to broaden local content and develop capacity in the upstream industry is non-negotiable, stressing that stakeholders must not relent as the opportunities abound, and many more are lined up with an expected uptake in drilling activities, demand for line pipes, and consumables essential for growing production output.
Executive Secretary of NCDMB, Simbi Wabote noted that Nigeria’s oil and gas sector could serve as the catalyst that would enable the country to achieve the desired double-digit GDP growth rate if operators were bold and disruptive in their strategy.
“One probable means through which double-digit GDP growth can be achieved is by harnessing the array of opportunities that exists in various categories enabled by the oil and gas industry,” he said.
According to him, opportunities driven by policies, guidelines, regulations, and statutes are attractive to investors as there is clarity on the framework governing their business endeavours.
Noting that gains are being recorded in the area of gas, Wabote said half of the local LPG requirement is however still being imported, adding that the consumption level is still far below the 4million tonnes consumption projected by the year 2025 under the National Gas Expansion Program (NGEP).
The Executive Secretary said: “These gaps in volumes and consumption spread present opportunities in local processing, storage depots, trucking, cylinders manufacturing, distribution pipelines, conversion kits, and many other opportunities.”
He said the agency has introduced and widened the options for accessing interventions further with the  $300 million Nigerian Content Intervention Fund with BOI, $50 million Nigerian Content R&D Fund, and a $50 million Nigerian Oil and Gas Park Scheme (NOGAPS) Manufacturing Fund.

“Over 70 companies have so far benefited from the intervention funds for asset acquisition, manufacturing, loan refinancing, and project financing. The forensic audit of remittances into the Nigerian Content Development Fund also opened up opportunities for 25 audit companies engaged to check the books of about 150 companies,” he said.
The Governor of Bayelsa State, Douye Diri said the pace at which the PIA is being implemented is unacceptable, adding that it remained saddening that the host community aspect of the law has not materialised.
Stressing that the document is skewed against the oil producing communities, Diri, represented by his Commissioner for Mineral Resources, Ebieri Jones said the integrity of oil pipelines in the region is questionable. 
Disclosing that a recent gas spill and recurring incidents show that the national oil company may be wanting in maintaining its infrastructure.
Also speaking at the event, the Group Managing Director of the NNPC, Mele Kyari said Nigeria would be supplying about 300,000 barrels of crude per day to Dangote Refinery. 
He disclosed that the government would not relent on the security approach to address oil theft, adding that all sectors remained the major revenue for the country as most industries in the country rely on the sector to survive. 

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Refinery: We’ll Ask Dangote To Sell Forex At Good Rate — Emefiele



…Says CBN, govt helped him build a refinery
…Raises interest rate to 18.5 %lAs NACCIMA, IPMAN, and others react

With the Dangote Refinery set to deliver its first products in July, the governor of the Central Bank of Nigeria, CBN, Mr Godwin Emefiele, said yesterday that the refinery would be persuaded to sell foreign exchange earnings to banks at a good rate.

Speaking at the end of the 291st Monetary Policy Committee, MPC, meeting in Abuja, Emefiele said his team would engage the promoter of the refinery, Alhaji Aliko Dangote, to ensure that Nigerians benefitted from the venture, adding that the CBN, the Federal Government and, indeed, the country helped him set up the refinery.

The CBN boss expressed optimism that the refinery would ease the foreign exchange scarcity in the country, noting that with local refining, about 20 per cent cost of the total cost of importing petroleum products could be saved, thereby reducing prices in the long run. He, however, said it was time to exit the fuel subsidy regime.

His words: “By the time the Dangote Refinery comes on stream, the price at which it (fuel) will be dispensed will be lower than what it is when we spend dollars to import because there will be no freight cost, no storage and all other logistics expenses.
“So we will be lucky to be having about 20 per cent savings from refining locally, rather than importing.

“But the important thing is that we have reached a point, whether we like it or not when we must exit subsidy.
“Dangote Refinery coming at this time gives us the confidence that even if we exit subsidy, the products will be available. And eventually, the interplay of market forces will also moderate the prices to a level that will help the country.

“So we are expecting that, no doubt, by the time he produces for domestic consumption, the excess will be exported by the numbers that he talked about, which we agree with.

‘’We should be able to save, conservatively, close to about $5 billion to $10 billion in foreign exchange that will come into the country.

“Whether it comes to our reserves or not is not the point, it is the fact that the dollar is available and it will be sold in the domestic market so that customers of banks who need to import do not necessarily resort to CBN for dollars.
“They can go to their banks and Dangote will sell dollars to their banks and we are going to ensure that it is done at a good market rate.

“What I would have loved to say on Monday (at the Dangote Refinery Commissioning) which I didn’t say was that the CBN, the government and the country have helped Dangote to set up that refinery.

“He is a Nigerian; Nigerians must benefit from that venture and we are going to engage him and talk to him and I am sure that being the richest man in Africa, he is going to throw a few crumbs so that the price will be lowered.”

N8trn interventions in 5yrs

Meanwhile, Emefiele revealed that the CBN had given out about N8 trillion in interventions to the private sector in the last five years.

He said: “In the last four to five years, we have done about N8 trillion in interventions to the private sector of the economy. The loans have been granted for 10 years, with a two-year moratorium and at single digit”.

The CBN boss disclosed, however, that going forward, the apex bank would reduce its quasi-fiscal activities.

MPR jerked up to 18.5%

At yesterday’s meeting, the MPC raised the Monetary Policy Rate (MPR) to 18.5 per cent from 18 per cent.
Emefiele said the strategy, which started in May last year, had been working as it had moderated the rate of inflation in the economy.

He admitted that the interest rate hike was constraining credit to the real sectors of the economy but that it remained the best option in tackling inflation.

He stated: “The current trend in price development would continue to be monitored by the bank with greater collaboration with fiscal authority to address the drivers of inflation.”

Meanwhile, the committee voted to keep the asymmetric corridor at +100 and -700 basis points around the MPR.

It also retained the Cash Reserve Ratio (CRR) at 32.5 per cent and equally left the Liquidity Ratio at 30 per cent.

We look forward to cost reduction — IPMAN

Reacting to the CBN’s declaration that Dangote would sell Dollars to banks at good rate, the National President of the Independent Petroleum Association of Nigeria, IPMAN, Elder Chinedu Okoronkwo, could not be reached for comments, yesterday.

But National Operations Controller, IPMAN, Mike Osatuyi, said: “Oil marketers are very happy about the Dangote Refinery. We were tied to the global market for several decades. Now, everyone will be free to patronise the refinery.

‘’We look forward to a significant cost reduction, apparently because freight and shipping costs will not apply anymore.
“With the coming onstream of the plant, the Federal Government will be encouraged to end fuel subsidy. This might be affordable to Nigerians, unlike what it could have been in the past.”

Dangote Refinery comes with multiplier effects — OGSPAN

Similarly, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “On a serious note, Alhaji Aliko Dangote should be commended for making this gigantic investment.

“Every patriotic Nigerian and African should be proud of this refinery. It is very huge and it comes with a lot of multiplier effects for Nigeria.

“I completely agree with the CBN governor that it will culminate in the generation of additional foreign exchange into Nigeria as well as assist the nation to conserve foreign exchange currently expended on massive importation of petroleum products.

“As a major crude oil producer, Nigeria should not have been involved in the importation of petroleum products. ‘’The nation was compelled by circumstances to go into importation. I am happy that this big refinery will enable us reduce or completely stop dependence on the global market.”

CBN should merge forex rates — NACCIMA

Also commenting, Sola Obadimu, Director General, Nigerian Chamber of Commerce, Industry, Mines and Agriculture, NACCIMA, while acknowledging the capacity of Dangote Refinery to generate forex, said CBN should rather focus on merging forex rates.

He said: “Honestly, my take is that CBN should merge these forex rates to avoid whatever might be called ‘good’ or ‘bad’ rates. And that’s the responsibility of CBN – to determine the true value of the Naira. Various exchange rates are basic ingredients for grandiose corruption as we know it.

“Yes, this is a very commendable project that has the capacity to generate forex whenever it starts to export and the proceeds would be convertible to Naira.

“At present, exporters through official channels are complaining that conversion for forex generated from exports is only available to them at official rates which may be unfair, given the fact that they never get enough forex at official rates when they need it either for imported inputs or machinery/parts.

“That’s the danger of dual or multiple exchange rates, particularly when the gaps are too wide as we have it now. But then, the government now has some stakes in the project.

‘’So they may reach some agreements on that level. But it might be preferred to have policies that encourage export activities by all as much as possible.”

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Cbn Raises Interest Rate To 18.5%; Highest In 22 Years




The Central Bank of Nigeria at its just concluded Monetary Policy Committee (MPC) meeting raised its benchmark interest rate (MPR) by 50 basis points to 18.5 per cent, the country’s highest in 22 years.

The CBN governor, Godwin Emefiele, made this known during the post-MPC press conference on Wednesday.

In April 2023, headline inflation increased to 22.22 per cent from 22.04 per cent in the previous month, marking its highest level since September 2005.

This is the third time the Mr Emefiele led apex bank will be raising it’s interest rate in 2023.

Nigeria has struggled with a high rate of inflation as well as a declining exchange rate at both the parallel and official markets.

In April 2022, headline inflation reached its highest level in more than 17 years, eroding the purchasing power of the populace.

However, the apex bank has continued to increase the interest rate to combat the continued rising inflation.

People Gazette

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Dangote Refinery Petrol Hits Market July, FG To Save N7tn




The Federal Government may save about N35tn in fiscal expenditure within the next five years with the commencement of operations at the Dangote Refinery and Petrochemicals.

The Governor of the Central Bank of Nigeria, Godwin Emefiele, disclosed this on Monday during the ceremony to inaugurate the Dangote Petroleum Refinery and Petrochemical facility in Ibeju-Lekki, Lagos.

The President, Major General Muhammadu Buhari (retd.), who inaugurated the refinery, which is currently the world’s largest single-train petroleum refiner, said his regime had been deliberate about ensuring public-private partnerships.

He described the refinery as a milestone for the Nigerian economy and a game-changer for the downstream petroleum market in the African continent.

Buhari said, “I recall that just about a year ago, I was here to commission your fertiliser (plant) and had the opportunity to briefly inspect this refinery complex which was under construction. The Group Chairman, Aliko Dangote, assured me that the refinery will be ready for commissioning before the end of my tenure.

“I’m aware that this is not the first time that the Dangote Group under Alhaji Aliko Dangote’s leadership is putting Nigeria on the global map through his bold investments in key industries. This has helped to transform our economy from heavy import dependence to a net exporter in some critical industries including cement and fertiliser.”

At the inauguration, which had in attendance senior government officials from Nigeria and other African countries, Buhari described the refinery as a game-changer, just as the Founder/Chairman, Dangote Group, Aliko Dangote, declared that the facility would put an end to the inflow of toxic substandard petroleum products into Nigeria.

The project was inaugurated at the Dangote Industries Free Zone, Ibeju-Lekki, Lagos State. It was attended by governors, lawmakers, government functionaries, royal fathers, captains of industries and prominent Nigerians from all walks of life.

According to the president, Nigeria’s economy, which has been stressed for many years and over a decade of insurgency, has also been severely impacted by several external crises including the global financial crisis, the collapse of oil prices, the Coronavirus pandemic, and the Russia-Ukraine war.

The consequences of these challenges, he said, constituted a severe strain on the economy, limiting government’s ability to provide basic infrastructure without resorting to huge borrowing.

He said, “Our government, therefore, focused its attention on creating an enabling environment for the private sector to thrive and fill the enormous gap in investments, not only in infrastructure, but also in all critical sectors.”

Dangote also stated that the refinery would start delivering refined products to the Nigerian market from July this year, as operators urged the Federal Government to ensure transparency in the supply of crude oil to the 650,000 barrels per day crude oil processing refinery.

Speaking at the event, the founder of the refinery, Dangote, said, “It is our firm commitment that we will replicate in this sector what we have actually achieved in the cement and fertiliser markets, while Nigeria transformed from being the largest importer of these crude products to a net exporter.”

He pointed out that the “first goal is to ramp up projections of various production to ensure that within this year, we are able to fully satisfy our nation’s demand for higher quality products to enable us to eliminate the tragedy of import dependency and stop, once and for all, the dumping in our market of toxic substandard petroleum products.

“Our first products will be in the market before the end of July, beginning of August this year.”

He also said the refinery plans to export to 53 African countries which depend on other countries for petroleum products.

Meanwhile, Emefiele said the Dangote Refinery and Petrochemicals could spare Nigeria about N5tn to N7tn annually in the fiscal expenditures of the federal government over the next five years.

He noted that the project would support the fiscal operations of the government, easing budget constraints of funding fuel subsidy.

The CBN governor added that the cost of fuel subsidy may hit N4.4tn by the end of 2022.

He said, “This project will equally provide support to the fiscal operations of the government as it could help ease budget constraints of funding the petroleum subsidy and engender fiscal savings. Available data indicate that, over a five-year period, fuel subsidy in Nigeria rose more than nine-folds from about N154bn in 2017 to over N1.43tn before another three-fold rise to N4.4tn by the end of 2022.

“A simple straight-line projection suggests that this figure could surpass N7tn within the next three years if we do not tackle it effectively. Thankfully, the Dangote Refinery and Petrochemicals could spare Nigeria about N5tn to N7tn annually in fiscal expenditure of the federal government over the next five years.”

12,000MW electricity projected

Emefiele also expressed optimism that Nigeria, under the incoming administration, would cease importing petroleum products, fertiliser and petrochemicals and save the country over $26bn.

He said, “Nigeria will cease importing petroleum products, fertiliser and petrochemical that drained over $26bn in 2022. The self-sufficiency in refined petroleum, urea, and polypropylene, which Nigeria has attained with this project is a strong testament to how leadership, dedication, focus, commitment, and resilience have helped Nigeria on its drive towards import substitution and export orientation.”

The CBN governor also noted that the take-off of the Dangote Refinery and Petrochemical factories came with some economic benefits to Nigeria, such as generating thousands of direct jobs and millions of indirect jobs, with over 135,000 permanent jobs.

He added that nearly 4,000 Nigerian personnel are on site, excluding employment by the various contractors and subcontractors at the project site.

The apex bank boss also said that the project would generate up to 12,000WM of electricity, saying, “I am also proud to state that the project will generate up to 12,000MW of electricity. In addition, the refinery and the other ancillary projects will have significant multiplier effects on other sectors of the economy by supporting a diverse range of sectoral value-chains.”

Emefiele further said that the project could save the country in terms of foreign exchange and fiscal burden.

He said, “According to the balance of payments statistics, the cost (including freight) of petroleum products imports into Nigeria doubled over a five-year period from about $8.4bn in 2017 to $16.2bn (indicating an annual average of $11.1bn), before rising further to $23.3bn by end-2022. At this rate, the average annual cost of petroleum products imports to Nigeria could reach $30bn by 2027 if we continued to rely on petroleum imports. These figures suggest that the refinery could engender foreign exchange savings, to the country, of between $25bn and $30bn annually.”

He added that the country could earn about $30bn foreign exchange savings and an extra $10bn, making a total of $40bn foreign exchange savings.

“The impact of this savings will be directly reflected in Nigeria’s foreign exchange reserves by reducing the pressure on our balance of payments. There are also substantial benefits that we will gain from the export of refined products to the rest the world.

“In addition to the nearly $30bn foreign exchange savings from the reduction in petroleum imports, the economy is projected to benefit an extra $10bn of foreign exchange inflow annually through the export of refined petroleum products, which will further boost our official reserves and enhance exchange rate stability,” the CBN governor added.

‘Dangote repaying loans’

Emefiele also disclosed that the Dangote Group has paid back about 70 per cent of the loans it took to construct its mega 650,000 barrels per day refinery in Lagos.

The CBN boss said the refinery was initially estimated to cost just about $9bn but the project cost escalated and was eventually completed with a total of $18.5bn.

The amount, he said, constituted 50 per cent equity investment by Dangote and 50 per cent debt finance by banks.

Emefiele said the commercial loan component of the project was financed majorly by domestic banks while the rest was provided by foreign banks.

“We have it on good authority that the Dangote Group has paid off some portion of these commercial loans even before this commissioning today,” Emefiele said.

He noted that the debt for the refinery has decreased from $9bn to $2.7bn, which is a 70 per cent decrease.

African leaders speak

The Group Chief Executive Officer, Nigerian National Petroleum Company Limited, Mele Kyari, said the coming on stream of the refinery was a defining moment for Nigeria’s energy sector.

He said NNPC would continue to support investments in the downstream sector that sought to eliminate import-dependency.

Some African leaders who were present at the event described the project as a game-changer that would benefit all of Africa.

Those present at the historic inauguration of the refinery include the President of Ghana, Nana Akufo-Addo; President of Niger Republic, Mohammed Bazoum; President of Chad, Mahamat Deby.

Others include the President of Senegal, Macky Sall, and his Togolese counterpart, Faure Gnassingbé.

In his special remarks, the Ghanaian President, Akufo-Addo, said the refinery would not only strengthen the Nigerian economy, but that of West Africa and the entire continent by extension.

“I’ve said it before, that when we think of West Africa and Africa before our individual countries, we are not just being Pan-Africans, we are being true nationalists because what makes West Africa and indeed Africa better will make each of our individual countries better and more prosperous.

Sanwo-Olu hails Buhari

The Lagos State Governor, Babajide Sanwo-Olu, praised Buhari, the President-Elect, Bola Tinubu, and Dangote for their contributions to the establishment of the first privately-owned refinery in Nigeria.

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