Business
China February flash PMI hits seven-month low, spooks markets
BEIJING – Activity in China’s factories shrank again in February, a preliminary private survey found on Thursday, reinforcing concerns of a minor slowdown in the economy and spooking markets across the region.
The flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to a seven-month low of 48.3 in February from January’s final reading of 49.5, where a reading below 50 indicates a contraction while one above shows expansion.
The Lunar New Year festival, which began on January 31 and covered early February, likely affected factory output as manufacturers shut shop for China’s biggest annual holiday.
The Shanghai Composite Index .SSEC gave up its early gains on the news, while Asian markets tumbled.
The yield on benchmark 10-year Treasury notes fell to 2.712 percent after the China flash PMI report, compared with Wednesday’s U.S. close of 2.734 percent.
The yen, which often gains in line with investors’ aversion to risk, got a leg up against its rivals after the China flash PMI report. The dollar’s early gains unraveled and it slipped 0.3 percent to 101.97 yen, moving further away from a two-week high of 102.73 yen hit on Tuesday.
The Australian dollar lost nearly half a U.S. cent after the report was released, reflecting China’s status as Australia’s biggest export market. The New Zealand dollar fell two tenths of a U.S. cent.
“It looks like across-the-board weakness. The indexes should be more correlated with the export economy than the domestic economy,” said Stephen Green, an economist with Standard Chartered bank.
“So it’s slightly surprising given stronger export numbers we’ve seen in the last couple of months.”
Some analysts cautioned against reading too much into the report, noting that it was a shorter-than-usual snapshot of activity, due to the New Year holiday, and that other indicators have been stronger.
“Macro numbers from national statistics agencies so far painted a mixed picture, with trade growth and credit expansion above market estimates,” Ting Lu and Xiaojia Zhi of Bank of America-Merrill Lynch in Hong Kong said in a note.
“At the moment, visibility of short-term growth momentum is quite low.”
The PMI’s employment sub-index fell for a fourth straight month to 46.9, its lowest point since February 2009, during the global financial crisis.
The jobs sub-index in the PMI is one of the few indicators that measures the health of China’s labor market, an area of priority for Beijing which wants to keep unemployment low to maintain social stability.
Other analysts said the weak numbers would encourage the government to loosen monetary policy in order to keep the economy growing at 7.5 percent, a level many in the market believe China will try to achieve this year.
Zhiwei Zhang of Nomura in Hong Kong said he expected a lowering of the required reserve ratio, which sets how much cash a bank must hold against loans, by 50 basis points in the second quarter.
The preliminary February index, which shrank in every category except suppliers’ delivery times, showed the new orders sub-index fell below 50 for the first time in seven months, while new export orders were higher than in January, but remained below 50. The index is seasonally adjusted.
The weak China preliminary index for January was believed to be one cause of last month’s selloff of emerging market assets.
Aside from seasonal factors, the government’s ongoing attempt to restructure the economy away from exports and towards domestic consumption has cooled investment growth – a main engine of China’s economy – to its lowest in at least a decade.
Thursday’s data is the latest sign of difficulty in China’s factories. A series of PMIs in January showed growth in China’s manufacturing and services sectors at multi-month or multi-year lows. But those disappointing PMI readings were countered by surprisingly buoyant growth in exports and bank lending, which suggested that the world’s No. 2 economy was not faring as badly as some feared.
China’s full-year growth for 2013 was 7.7 percent, steady from 2012 and just slightly above market expectations of 7.6 percent, which would have been the slowest since 1999.
The Markit/HSBC PMI is more weighted towards smaller and private companies than the official index, which contains more large and state-owned firms.
The final Markit/HSBC manufacturing PMI for February is due on March 3 and the official manufacturing PMI will be released on March 1.
– REUTERS
Business
Adoption of AI Feature as NIPetGE Pays Courtesy Call at NNPC Ltd
Enhanced adoption of artificial intelligence and other digital technologies to improve operations in Nigeria’s oil and gas industry is taking the centre stage in relevant circles.
The issue came up strongly when the President-elect of the Nigerian Institute of Petroleum and Gas Engineers NIPetGE, Prisca Kanebi, paid a courtesy call at the Nigerian National Petroleum Company Limited (NNPC Ltd), Abuja.
Biztellers reports that the Kanebi led delegation was received by the Group Chief Executive Officer of the NNPC Ltd, Bayo Ojulari, represented by the Executive Vice President, Gas, Power and New Energy, Olalekan Ogunleye.
According to a statement made available on Sunday, discussions at the meeting focused on the future of Nigeria’s hydrocarbon industry amid global energy transition concerns, technological changes and sustainability targets.
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The statement indicated that the NNPC Ltd acknowledged the role of NIPetGE in policy advocacy, technical development and innovation within the sector.
Speaking during the meeting, Kanebi highlighted recommendations from the institute’s recent conference, including the proposed establishment of a national centre for intelligent energy systems to support the deployment of artificial intelligence, the Internet of Things and robotics across the petroleum value chain.
She also commended the Federal Government’s decarbonisation efforts and reiterated the institute’s support for policies aimed at improving sustainability in the industry.
The institute also recommended the creation of a hydrocarbon-linked emissions trading system to allow Nigeria to take part in global carbon markets.
The institute also proposed fiscal incentives to support local manufacturing and service delivery in the oil and gas sector, as well as the expansion of the Energy Transition Plan to include measurable upstream decarbonisation targets backed by tax credits.
Other proposals included increased public-private partnerships in emission control infrastructure, carbon capture projects and hybrid renewable energy initiatives.
Both organisations also stressed the need for stronger collaboration between industry and academic institutions to improve professional capacity and align petroleum engineering practice in Nigeria with international standards.
The institute further disclosed that its bill seeking chartered status had passed second reading and was progressing towards a third hearing at the National Assembly.
It added that NNPC Ltd pledged support for future collaborations with the institute on initiatives aimed at improving efficiency and innovation in the energy sector.
Business
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Business
Local Firms Lead Revival of Idle Oil Wells – SPE
Nigeria’s indigenous oil and gas companies are reopening dormant wells and ramping up production from assets acquired from international oil companies (IOCs) to boost crude oil output.
The Society of Petroleum Engineers (SPE), Nigeria Council, made the assertion through its Chairman, Francis Nwaochie, on the sideline of the Offshore Technology Conference (OTC) which ended at the weekend in Houston, Texas.
Nwaochie said indigenous operators were already taking advantage of opportunities created by disruptions in the global energy market to increase production from existing assets.
According to him, local firms that recently acquired onshore and shallow water assets from IOCs were aggressively reviving inactive wells and maximizing available infrastructure to raise output levels.
“What we are seeing now is that indigenous companies are reopening wells from the assets they acquired from the IOCs. Some of them have almost doubled production from those existing assets,”.
He explained that the renewed focus on dormant wells and existing facilities had become critical at a time the global oil market was facing supply shortages triggered by geopolitical tensions in the Middle East.
The SPE Nigeria Council Chairman noted that Africa, particularly Nigeria, was well positioned to benefit from the supply gap because of the continent’s relative stability compared to some other oil-producing regions.
“There is a huge opportunity for Africa right now. The focus is gradually shifting to Africa because of the volatile environment in many other producing regions.”
He stated that indigenous operators were leveraging digital technologies, financing opportunities and local expertise to improve production efficiency and optimise existing fields.
He added that stronger implementation of local content policies was also helping to create a more stable operating environment for oil and gas investments.
“Local content is very critical. Once communities and local companies clearly understand their roles and benefits, then you create peace across the industry. Business only thrives in peaceful environments.”
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Nwaochie also stressed the need for Nigeria to move beyond crude oil production and begin developing indigenous technologies for the energy industry.
According to him, SPE Nigeria Council was actively supporting innovation and technology development among young Nigerian engineers and researchers.
He disclosed that the association was engaging the National Universities Commission(NUC) on reforms to engineering curricula in universities to better prepare graduates for the future of the energy industry.
“One of our major focuses in SPE is technology development. We should not only import machines and equipment, we must begin to develop our own technologies locally.”
Nwaochie revealed that SPE was already supporting local innovators working on technologies such as remotely operated underwater vehicles (ROVs), noting that indigenous technology development will strengthen Nigeria’s economy and deepen local participation in the oil and gas sector.
“We may not get everything right immediately but we must start somewhere. That is how countries that dominate the global energy industry built their capacities.”





