African Oil Market Archives - African Financial & Economic Data

05 Apr

Trump’s Trade War Could Hit South African Rand Through Oil Price

The path ahead looks challenging for South Africa’s rand, if oil prices are anything to go by.

Concern that U.S. President Donald Trump’s measures will trigger a trade war may hamper global growth and weaken demand for oil, according to Mehul Daya, a strategist at Nedbank in Johannesburg.

“Oil leads the rand,” Daya said. “Sixty percent of the movement in the rand can be explained by changes in the oil price since 1990.”

Talk of tit-for-tat tariffs has already hit the rand and other South African assets. The currency led emerging-market losses Wednesday and was down 0.8 percent to 11.9065 per U.S. dollar as of 2:43 p.m. in Johannesburg. The yield on rand-denominated bonds due December 2026 jumped seven basis points to 8.09 percent. Johannesburg’s equity benchmark tumbled 2.3 percent as escalating tensions between the U.S. and China dragged emerging markets lower.

“It’s all due to those trade wars and a lot of uncertainty,” said Marius Grobler, a trader at Unum Capital. “Investors are seeing a lot of fear on the market.”

Since 2016, oil has recovered from about $28 to $68 a barrel. That’s supported the rand, strengthening it to below 12 per dollar from more than 16, according to Nedbank.

Read the full article at Bloomberg Markets

09 Jan

Why Africa’s Top Oil Producer Is Low on Gasoline

Nigeria, Africa’s biggest oil producer and a member of OPEC, has suffered fuel shortages over the past few weeks. They complicated transport and hurt economic activity and, in the words of President Muhammadu Buhari, ensured that for many Nigerians the Christmas holidays were “anything but merry and happy.”

His administration says it’s working overtime to end the queues that have formed at gasoline stations throughout much of the country. Nigeria is about the only major African economy to experience frequent fuel scarcities.

1. What’s the reason for the shortages?

Part of the problem is that, despite pumping 1.8 million barrels a day of crude, Nigeria has to import almost all its fuel because of the decrepit state of its refineries. But in that, it isn’t alone: Most countries in Africa lack refineries. A bigger problem is that Nigeria caps gasoline prices, often at levels below retailers’ costs.

The cap today is set at 145 naira, or $0.40, a liter, which would translate to $1.52 per gallon. That makes the west African nation one of the 10 cheapest places in the world to buy gasoline and compares to a global average of $1.12 and a U.S. average of $0.73 per liter, according to GlobalPetrolPrices.com.

Cheap Fuel

Nigeria is among the world’s 10 cheapest places to buy gasoline

2. Does that mean fuel retailers can’t make money?

They could when the current cap was set, in May 2016. Back then, Brent crude traded at less than $50 a barrel. It’s since risen about 40 percent, to $68, which has made it more expensive for retailers to buy refined fuel.

Neither does it help that Nigeria bases the cap on its official exchange rate of 305 naira per dollar, which few retailers can access, given that the market rate is almost 20 percent weaker at 360.

Many have stopped importing, leaving that job almost entirely in the hands of the state oil company, the Nigerian National Petroleum Corp., a task it is struggling with and was never designed to do on such a scale.

To read the full article, click here.

05 Jan

Angola Joins Long List of Oil Producers in Scrapping Dollar Peg

Angola is poised to become the latest emerging-market nation to dispense with a pegged currency, another sign that a four-year slide in oil prices has battered exporters in the $2.2 trillion-a-year market.

The southern African nation, an OPEC member, said this week that it would let the kwanza trade within a new band. The rate at which it was fixed against the dollar since April 2016 “does not reflect the truth,” according to central bank Governor Jose Massano.

It joins a long list of commodity exporters — from Russia to Egypt, Kazakhstan, Nigeria and Uzbekistan — that have floated or devalued currencies in a bid to end crippling shortages of foreign exchange and to revive economic growth.

“It was a long time coming,” said Kaan Nazli, a strategist at Neuberger Berman in The Hague, which manages almost $300 billion, including Angolan bonds.

The move underlines just how forcibly President Joao Lourenco is trying to bolster his nation’s finances, three months after he replaced Jose Eduardo dos Santos, the ruler for almost four decades.

Angola, which relies on oil for more than 90 percent of exports, kept a tight grip on its currency as the commodity slid. While the kwanza has already weakened 40 percent to 166 per dollar since mid-2014, analysts say it’s still too strong. Charles Robertson, Renaissance Capital’s chief economist, said in a note Thursday that the kwanza was the most overvalued of the more than 50 currencies he analyzes and that its fair value was 348 to the greenback.

The currency has tumbled to 430 on the black market as dollars run dry, leaving hundreds of companies struggling to pay foreign workers and overseas suppliers. Economic growth fell to zero in 2016 after averaging almost 9 percent per year during the previous decade.

Angola has bled reserves — which more than halved in the past four years to the lowest since 2010 — to defend the peg. The dos Santos administration said it was the best way for the import-dependent nation to curb inflation, which stands at 28 percent.

15 Dec

New Africa Gas Comes at the Right Time for Europe

A week ago, Cameroon was getting ready to jostle for space in a global liquefied natural gas market already crowded with new supplies from the U.S. and Russia. Now the extra output couldn’t come at a better time.

France’s Perenco SA and U.S.-traded Golar LNG Ltd. will start shipments from their $1.2 billion LNG project off Cameroon in February, according to people familiar with the plans. That’ll be just in time for a surge of almost a third in European imports, according to consultants Energy Aspects Ltd., after a cold snap and disruptions at supply hubs in Austria, the U.K. and Norway sent gas prices to a four-year high.

“It’s good to see a new African exporter coming into the market,” Trevor Sikorski, head of natural gas and carbon research at Energy Aspects, said by phone. “An obvious market is Europe, particularly when the markets can be a bit stressed.”

Cameroon enjoys a geographical advantage in the European market. It takes about 11 days to ship a cargo to Britain, while a tanker from Qatar, Europe’s biggest supplier of LNG, takes about two weeks. Saving a few days may prove crucial during freezing weather or a sudden supply crisis — a growing risk as the region’s own gas infrastructure ages and becomes vulnerable to breakdown.

Floating Facilities

The Cameroon project — named Hilli Episeyo after its production vessel — is only the second floating LNG facility to come into production worldwide, after Malaysia launched a vessel last year. While the latter was built from scratch, the Cameroon unit is a converted LNG tanker. Its success could trigger more investments in the technology, potentially helping companies such as Ophir Energy Plc, which needs funds for a project off Equatorial Guinea.

“Once this project demonstrates its technical, operational and commercial viability, smaller E&P companies and funding sources should become more willing to develop and finance such projects,” said Claudio Steuer, senior visiting research fellow at the Oxford Institute for Energy Studies.

The recent price jump on the continent has made northwest Europe a more attractive destination for tankers carrying the super-chilled fuel. The U.K. is now set to take the first LNG from Russia’s Yamal project, rather than Asia as initially expected. The $27 billion plant in northern Siberia started production earlier this month, while Cove Point in Maryland is readying for operations too.

To read the full article, click here.

15 Dec

Nigeria Takes $1 Billion From Oil Savings to Fight Militants

Nigeria will take $1 billion from a special account for oil-revenue savings to boost its war against Boko Haram Islamist militants in the country’s northeast.

Governors of the country’s 36 states met with the federal government as the National Economic Council to deliberate on the expenditure, according to Godwin Obaseki, governor of southern Edo state.

“The governors have given permission to the federal government to spend the sum of $1 billion in the fight against the insurgency,” he told reporters in Abuja after the meeting on Thursday. That will leave $1.32 billion remaining in the excess crude account, where oil income above budgeted estimates are saved, according to figures provided by the government.

Boko Haram militants, who are opposed to Western education and seek to impose their version of Islamic law in Nigeria, are in the eighth year of an insurgency that has left at least 20,000 people dead, according to the government. President Muhammadu Buhari won elections in 2015 with the defeat of the group among his key campaign pledges.

“We are getting closer to the elections and defeating Boko Haram was a major campaign promise; going in these elections without delivering on that promise will be tough,” said Freedom Onuoha, a senior political science lecturer at the University of Nigeria, in the southeastern town of Nsukka.

With a new vote approaching, some of these funds for security may find their way into the election campaign, Onuoha said. “The details of spending aren’t usually made public. That creates an opportunity, a smokescreen, that can be used to fund elections and other hidden spending,” he said.

Ambushing Troops

Concerns the government may misuse the money are misplaced, according Laolu Akande, a spokesman for Vice President Yemi Osinbajo, who represented the federal side at the meeting with governors. “Nigerians have come to appreciate that the Buhari administration is as one that is judicious with the management of the country’s resources and actively fighting corruption,” he said.

To read the full article, click here.

11 Oct

Eterna Plc Gets Exclusive Rights For Distributing Castrol Oil in Nigeria

Eterna Plc. has officially launched Castrol Oil into the market of Nigeria. This follows the company’s 2015 distribution agreement with Castrol. It is also worthy to note that Eterna was granted the license to blend and distribute Castrol Automobile and Industrial lubricants at its Sagamu, Ogun state facility.

Some of the Castrol products launched into the market include Castrol Edge- fully synthetic oil with fluid strength technology. Castrol Magnatec- semi-synthetic oil instant protection from the start and Castrol GTX Essential-trusted protection for your engine.

“I am proud to announce that the latest addition to the Castrol GTX family “Castrol GTX Essential” was produced for the first time in the world at our plant in Sagamu this August. This is a clear demonstration of the confidence reposed in our manufacturing capabilities by Castrol,” said Mahmud Tukur, Managing Director of Eterna PLC.

Eterna and Castrol’s journey

According to Mahmud Tukur, the journey began as far back as 1991 through the vision of the company’s founder, Otunba Tunji Lawal Solarin, when Eterna started importing and distributing Castrol Lubricants in Nigeria. A robust marketing structure was set up and with increased market sales, Eterna began to manufacture lubricants locally through a third-party facility on an interim basis.

The aim was always for the company to own its blending facility and this dream became a reality when Eterna secured a US $940,000 loan from the International Finance Corporation (IFC) in 1995 to construct what was to eventually become one of the best and most modern lubricant manufacturing plants in Africa. Castrol designed the plant and provided the required technical support during construction ensuring that the plant met global standards.

Twenty years later, Eterna’s 15,000MT capacity state-of-the-art lubricant manufacturing plant, which is fully owned by its subsidiary, Eterna Industries Limited, is one of the only three Castrol accredited blending plants in Africa. The plant is located in Sagamu, Ogun state on a sprawling 5 hectares of Prime Industrial Real Estate.

02 Oct

Kenya: U.S.$10 Million Equipment for Early Oil Plan on Its Way

Kenya: Tullow Oil has contracted Dubai-based Almansoori Petroleum Company to supply an Early Product Facility (EPF) at a cost of $10 million, to help it extract crude in South Lokichar in Kenya’s north, even as uncertainty surrounds the Early Oil Pilot Scheme.

The deal with the Dubai company was signed early this year as part of the wider processes in the run up to early production, which has run into trouble after the government shelved it citing logistical challenges.

But Tullow had already secured the government’s approval to bring the Early Product Facility and have it installed. The Ministry of Energy gave the green light for its procurement.

Tullow Oil says that it has invested $1.5 billion in Kenya since it started exploration activities in 2010, including $213.5 million this year. Of this, $100 million is being spent on preparing the oilfields to start production and exporting of crude oil.

The EPF, which is a temporary equipment and being ordered on a rental basis, will enable Tullow Oil connect all the 40 wells it has dug and thus achieve the targets of extracting 2,000 barrels of crude every day when the EOPS begins.

The oil firm says the equipment is on its way and is expected to be installed in November, after Tullow secures all the necessary approvals from government agencies like the Energy Regulatory Commission, the National Environment Management Authority and the Kenya National Highways Authority.

“We have decided to rent a temporary facility for pumping the crude for transportation to Mombasa before a permanent production facility can be installed to facilitate full-scale production when the pipeline is ready,” said Tullow Oil communications manager Timothy Tororey.

Impediments

He said that Tullow expects the EOPS to kick off at some point despite, a campaign by some oil marketing executives and civil society groups, who say the scheme is a loss-making venture, especially considering the current crude oil prices averaging $55 per barrel on the international market.

24 Aug

Africa: Agriculture a Culprit in Global Warming, Says U.S. Research

New York — Agriculture has contributed nearly as much to climate change as deforestation by intensifying global warming, according to U.S. research that has quantified the amount of carbon taken from the soil by farming.

Some 133 billion tons of carbon have been removed from the top two meters of the earth’s soil over the last two centuries by agriculture at a rate that is increasing, said the study in PNAS, a journal published by the National Academy of Sciences.

Global warming is largely due to the accumulation of carbon dioxide in the atmosphere from such activities as burning fossil fuels and cutting down trees that otherwise would absorb greenhouse gases such as carbon dioxide.

But this research showed the significance of agriculture as a contributing factor as well, said Jonathan Sanderman, a soil scientist at the Woods Hole Research Center in Falmouth, Massachusetts and one of the authors of the research.

While soil absorbs carbon in organic matter from plants and trees as they decompose, agriculture has helped deplete that carbon accumulation in the ground, he said.

Widespread harvesting removes carbon from the soil as do tilling methods that can accelerate erosion and decomposition.

“It’s alarming how much carbon has been lost from the soil,” he told the Thomson Reuters Foundation. “Small changes to the amount of carbon in the soil can have really big consequences for how much carbon is accumulating in the atmosphere.”

Sanderman said the research marked the first time the amount of carbon pulled out of the soil has been spatially quantified.

The 133 billion tons of carbon lost from soil compares to about 140 billion tons lost due to deforestation, he said, mostly since the mid-1800s and the Industrial Revolution.

But the findings show potential for the earth’s soil to mitigate global warming by absorbing more carbon through such practices as better land stewardship, more extensive ground cover to minimize erosion, better diversity of crop rotation and no-till farming, he said.

The world’s nations agreed in Paris in 2015 to reduce emissions of greenhouse gases generated by burning fossil fuels that are blamed by scientists for warming the planet.

President Donald Trump pulled the United States out of the landmark Paris accord in May, saying it would undermine the U.S. economy and weaken national sovereignty.

Supporters of the accord, including some leading U.S. business figures, said Trump’s move was a blow to international efforts to tackle global warming that would isolate the United States.

Source from allAfrica

14 Aug

Nigeria: Prepare for Life After Oil, Govt Advises Amnesty Beneficiaries

Port Harcourt — As the world marked the United Nations 2017 International Youth Day saturday, the federal government has warned youth in the country, especially beneficiaries of the amnesty programme in the Niger Delta region to prepare for life after oil.

Speaking at a forum to mark the event in Port Harcourt, the Presidential Adviser on the Amnesty Programme, Gen Paul Boro, called on the Niger Delta youths to prepare for life after oil by making use of the skills, knowledge and experience they gained while undergoing training.

The forum was put in place by a non-governmental organisation (NGO), Nevido Media in collaboration with the NOA with the support of the Nigerian Youth Council and other bodies.

Boro called for paradigm shift in thinking and focus among the youths and beneficiaries of the amnesty, saying, “since it has become clear that oil will not last forever, there is need to prepare the youths for the future.”

He noted that the federal amnesty programme had the mandate to train 30,000 youths, out of which it had already trained 16,000.

Represented by the Head, monitoring and evaluation in the federal amnesty, Mr. Bestman Probel, Boro explained that this was why “the youths have been drawn into training in agriculture and skills while an exit programme whereby the youths after training are mobilised to start practicing the trade they learnt”.

In his remarks the Rivers state Director of NOA, Mr. Oliver Wolugbom, expressed concern that Nigerian youths have abandoned the old cherished value system and taken to kidnapping, cultism, armed robbery, thuggery and other odious practices that debase humanity.

“It is equally a source of concern that all the centrifugal forces such as separatist movements by ethnic bodies and their accompanying hate speeches are being bandied by the youths”, he said, adding that for peace to be built in the society, the youths must be properly positioned while the leadership re-strategise to plan

From allAfrica

01 Jun

Congo Republic inaugurates $109 million hydroelectric dam

BRAZZAVILLE – Congo Republic inaugurated a $109 million hydroelectric dam constructed by China Gezhouba Group Co Ltd on Monday, in a boost to the oil-producing country’s agriculture and forestry sectors, the government said.

The 19.9 megawatt (MW) dam in the northern town of Liouesso brings Congo’s hydroelectric production to 214 MW, nearly half of total national power output. The country produced just 89 MW in 2000, according to the government.

“The Liouesso dam will give great productive capacity to the businesses installed in the region,” President Denis Sassou Nguesso said at the inauguration ceremony, though his infrastructure minister noted the government had yet to find buyers for three-quarters of the dam’s output.

Oil accounts for around 65 percent of GDP in the central African nation, Africa’s fourth-largest crude producer, but it is aiming to diversify its economy by increasing investments in infrastructure as well as in the mining and forestry sectors.