Shell not leaving Nigeria, investing more in deepwater — Osagie

Managing Director, Shell Petroleum Development Company and Chair, Shell Companies in Nigeria, Mr. Osagie Okunbor on Tuesday insisted the company is not leaving Nigeria despite moves to divest its onshore assets.

Okunbor who disclosed this during a high-level panel session at the ongoing Nigeria Economic Summit, said the company is concentrating more in the deepwater where it has significant technological and financial advantage.

The session had the theme, Fuelling growth: The Future of Oil and Gas.

He explained that the company is investing more money in Nigeria with a single project in the deep offshore costing as much as $5 billion.

“Shell is not leaving Nigeria. We are not going anywhere and we will be together for a long time. Our onshore assets shares are being divested to a consortium of four companies which had gone through rigorous selection process,” he stated.

He noted that despite pessimism around the industry, Nigeria’s petroleum sector is not in decline.

He said: “Let us not go away from here with the thought that our industry is in decline, it is not. I make bold to say that since the enactment of the PIA (Petroleum Industry Act), and the supporting regulations, we are actually in a much better place.

“The Presidential directives that have come out are providing the degree of coherence that we hadn’t seen in a long time in the industry,” he added.

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Also speaking at the panel session, the Managing Director, Nigeria Liquefied Natural Gas Limited, NLNG, Mr. Philip Mshelbila pointed that it has become critical that Nigeria must grow its economy and diversify the economy.

According to him, Nigerians have to lead the drive to achieve both the growth and diversification of the economy.

He said: “If I go back on the need for the economy to grow, it is key that the oil and gas industry participate in that growth as well. We have huge potential and it is important that we diversify.

“But the way that I see diversification in Nigeria is that it needs to be addictive rather than a replacement. If you go back to the 50s and 60s, what happened then was that we had agriculture based economy but it then got replaced with oil and gas as the primary driver of the economy. What we are asking for is not a reversal of that but that both must grow,” he added.

He explained that the insecurity in the Niger Delta region has limited the growth of the oil and gas industry, noting that it was responsible for driving international oil companies away from onshore operations.

Mshelbila said this has also impacted the operations of Nigeria LNG with the company’s six trains operating at 62 percent capacity, stressing that Nigeria has not addressed insecurity challenges in Niger Delta.

“To date NLNG has never had problem with financing but our capacity utilisation was in the 40s and year to date our capacity utilisation is 62% which means that roughly about 40 capacities has largely been empty. This is a result of a number of different things; one of them is that investment has slowed over the past decade within the upstream. Coupled with this is the insecurity in the environment,” he stated.

On her part, the Group COO, MRS Holdings, Amina Maina assured that the ongoing petrol shortage in the country would ease in the coming days as more supply comes from the Dangote Refinery.

“I think over the next few days those queues will disappear because I’m aware that there are a lot more products that have come into the system. Dangote Refinery has started selling petrol and I’m aware that trucks are going out and a vessel is currently loading. So by the end of this week we should have more petrol from Dangote Refinery,” she added.

Shell not leaving Nigeria, investing more in deepwater — Osagie

Nigeria’s foreign reserves rise to $39bn

The Governor of Central Bank of Nigeria, CBN, Olayemi Cardoso, said yesterday that the country’s foreign reserves rose by 12.74 per cent to $39.12 billion as at October 11.

He also said though inflation had shown “gradual moderation,” indicating that the monetary policy measures were “becoming effective,” it remained a concern.

Cardoso, who disclosed this when he appeared before the House of Representatives committee on banking regulation, yesterday, in Abuja, said the country’s reserves stood at $34.70 billion at the end of June.

He said the nation’s foreign exchange reserves have “grown significantly” with remittance flows currently representing 9.4 percent of total external reserves.

“The reserves rose by 12.74 per cent to $39.12 billion as of October 11, 2024, from $34.70 billion at the end of June 2024,” he said.

The CBN governor said the foreign reserves were driven largely by foreign capital inflows, receipts from crude oil-related taxes and third-party.

He said: “In Q2 2024, we maintained a current account surplus and saw remarkable improvements in our trade balance. The current external reserves position can finance over 12 months of import of goods and services or 15 months of goods only.

“This is substantially higher than the prescribed international benchmark of 30 months, reflecting a robust buffer against external shocks.

“Regarding the foreign exchange market, the bank implemented various reforms including a unification strategy, which streamlined various exchange rate windows into a single model, adopting the willing buyer, willing Seller’ approach to enhance FX liquidity and financial market stability.

“This move was aimed at fostering transparency, reducing market distortions, and enhancing the efficiency of foreign exchange allocations.

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“This consolidation involved the implementation of new operational guidelines which included removing the international money transfer operator, IMTOs, quote cap.

“Additionally, the bank resumed the sales of FX at the NAFEM and Bureau De Change, BDC, segments, bolstered by an improved supply from foreign portfolio investors, FPIs.

“In the foreign exchange market, we have achieved increased transparency and improved overall supply. By allowing the foreign exchange rate to be determined by market demand and supply, the CBN has reduced arbitrage and speculative activities and eliminated the front-loading of FX demand.

“These policy measures have effectively narrowed the exchange rate disparities between the NAFEM and BDC segments which have largely led to the convergence of FX rates.

“Improved transparency in the market has restored market confidence leading to increased capital inflows which enabled the CBN to clear existing FX backlogs.

“The settlement of all legitimate backlogs of outstanding FX obligations by the bank has significantly improved Nigeria’s credibility and ratings across the global financial market, helping to boost investor confidence, and enhanced liquidity in the foreign exchange market.

Inflation remains a concern

The latest data by the National Bureau of Statistics (NBS) indicate that the consumer price index (CPI), which measures the rate of change in prices of goods and services, rose to 32.7 percent in September.
The increase was the first in three months after the country’s inflation rate declined twice in July and August.

Cardoso said inflation has shown “gradual moderation,” indicating that the monetary policy measures were “becoming effective”.

He said: “We anticipate steady moderation of inflationary pressures in the last quarter of 2024, supported by our monetary policy measures and the federal government’s recent initiatives, such as tax incentives on businesses in the economy.’

“To combat inflation, we have fully reverted to an orthodox monetary policy approach and implemented a comprehensive set of monetary policy measures.

“These include raising the policy rate by 850 basis points to 27.25%, increasing cash reserve ratios and normalising open market operations as our primary liquidity management tool.

“In addition, we have adopted an inflation-targeting (IT) monetary policy framework as part of the bank’s enterprise strategy (2024-2028).”

“The IT framework, widely adopted across various global economies, is renowned for its effectiveness in combating persistent inflation.”

The CBN govenor said these measures were aimed at stabilising prices, optimising liquidity management, and engendering an effective monetary policy framework.

Nigeria’s foreign reserves rise to $39bn

NNPC sells petrol to IPMAN at N995/litre

The Nigerian National Petroleum Company Limited (NNPCL) has agreed to supply Premium Motor Spirit (petrol) to members of the Independent Petroleum Marketers Association of Nigeria (IPMAN) for N995 per litre.

This came when the Department of State Services stepped in to resolve the dispute between the two parties.

The National Vice President of IPMAN, Hammed Fashola, informed our correspondent that the DSS intervention resolved many of the issues that merchants had.

Fashola also acknowledged that, as a result of their participation, the Nigerian Midstream and Downstream Petroleum Regulatory Authority agreed to pay the association’s unpaid N10 billion while resolving concerns with direct petrol purchases from the Dangote refinery.

“We really appreciate their intervention. They are doing their job. Anywhere they have seen that there may be a crisis, it is their duty to intervene. And their intervention brokered peace and understanding between the parties, and everybody agreed to work together,” Fashola stated.

Speaking on how much the NNPC will sell PMS to IPMAN, he replied, “For now, tentatively, I think they are offering us N995 per litre.”

With the N995 ex-depot pricing, Fashola promised that IPMAN members would no longer sell at costs much greater than those of large marketers, but said that distance is another reason for overpriced PMS.

“Our members sell at N1,200 or so, and this depends on the location. I think with the N995, there will be a little reduction. Don’t forget that if you transport a product from Lagos to a far distance, you will pay for transportation and other charges.

“We want to work on that because we want to have common ground. When we sit down and look at the price analysis offered to us and factor in all our expenses, we want to have a uniform price as much as possible.

“So, I will not be able to tell you the exact price now, but we are working on it, especially in the Lagos axis and other zones. We will look at the transportation cost and all that. At the end of the day, we will fix the price for ourselves,” he stated.

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The IPMAN head highlighted that IPMAN is interested in competitive prices, citing price disparities as a detriment to independent marketers.

“The price disparity has been a disadvantage between us and the NNPC Retail and major marketers. So, we are trying to look at how to close that gap so that we come back fully into the business. The lack of direct supply has been our problem, and now that we are solving that problem, I don’t think that disparity will be there again,” he stressed.

Fashola elucidated that the price differential is the reason for the queues in some filling stations in the cities.

“The queues you see are because of that difference in prices; that’s why people are saying there are queues. There are no queues; it is the price disparity that is causing the queues. So, if there is not much difference, we have filling stations everywhere; just drive in, buy fuel, and go. But that so much difference in the price is creating that scenario of queues,” he narrated.

Speaking on the directive that marketers can now buy petrol directly from local refineries, Fashola said the association would meet with Dangote this week.

“For now, we intend to meet with Dangote this week to see how we work out the modalities and all that. The Federal Government has given a directive, and we want to take full advantage of that,” he posited.

The IPMAN vice president emphasised that the association is not ignoring the NNPC either, as it would patronise the best price.

“At the same time too, we are not ignoring NNPC. So, whichever way, we are ready to do business with NNPC. It depends on the price; we go for the best.

IPMAN disclosed on Thursday that the cost of fuel from the Dangote Petroleum Refinery to NNPC was approximately N898/litre, but that NNPC was selling the same product to independent marketers in Lagos for N1,010/litre.

The association, which owns more than 70% of filling stations in the country, protested and threatened to shut down operations, as well as a return from the NNPC for previous petrol supply payments made by its members.

Abubakar Maigandi, the IPMAN national president, said in a live television interview on Thursday that the price was greater than what the NNPC paid for the Dangote refinery product.

He also stated that the national oil company had kept independent marketers’ funds for almost three months.

According to him, the NNPC acquired the fuel from the refinery for N898/litre but is demanding marketers to pay N1,010/litre in Lagos, N1,045 in Calabar, N1,050 in Port Harcourt, and N1,040 in Warri.

“Our major challenge now is that independent marketers have an outstanding debt from the NNPC, and the company collected products through Dangote at a lower rate, which is not up to N900, but they are telling us now to buy this product from them at the price of N1,010/litre in Lagos; N1,045 in Calabar; N1,050 in Port-Harcourt; and N1,040 in Warri,” Maigandi stated.

NNPC sells petrol to IPMAN at N995/litre