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Oil price slump: E&P companies share price dips

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By Kunle Kalejaye 

The dwindling crude oil may have affected some Exploration and Production, E&P companies share price listed on Nigerian Stock Exchange, NSE.
Seplat, the only E&P company listed on NSE had it share price dropped from N576 to N333.90 on February 6th, 2015.
The share price of other oil companies listed on NSE‎ operating in the midstream and downstream of oil and gas industry according to capital market analysts may not be affected by crude oil price fall.
An analyst who spoke with this reporter explained that ‎the reason why share price of downstream companies is not affected by crude oil price drop is due largely because the sector is regulated.
These companies listed on NSE include BECOPETRO, CONOIL, ETERNA, FORTE OIL, MOBIL, MRS, OANDO and TOTAL while JAPAUL is an oil and gas servicing company.
However, during this period of election tension, share price of these companies might suffer lose as indication revealed that the NSE which is dominated by foreign investment have withdrawn their money, awaiting the out come of the general election.
‎Meanwhile, some projects in the country’s petroleum industry also stand the risk of either total cancellation or abandoned as a result of falling crude oil price.
A source in the Department of Petroleum Resources, DPR explained to this reporter in confidence that the country’s  petroleum sector ‎might witness a ‘stand-still’ of project execution during this period of price instability and political upheavals.
The source also pointed to the negative impact price slump has on the country’s 2015 budget, forcing her to slash it by half.
Although the federal government’s benchmark oil price for this year’s budget is $65 a barrel, a figure the finance minister says will not change despite crude falling as low as $45 a barrel in January.
‎It was also gathered that N62.44 allocated to build refinery in the downstream sector to refine crude oil might be stalled.
Also N48.1 million for the survey in oil and gas production and utilisation in the country also face similar fate.
Earlier on, Group Managing Director, Nigerian National Petroleum Corporation, NNPC said a four  projects in the country that are expected to go through FID by year end could face delay.
The ‎affected projects in Nigeria are three in deep water, and one in mid-water .
He explained that cancelling these projects would eliminate $116 billion in capital expenditure by the year end of the decade.
As at the time of filing in this report, the names and owners of these projects are yet to be known
In another development American energy giant Chevron announced it will discontinue its shale gas project in Poland as it no longer makes business sense. 
 
The company previously canceled drilling projects in the Arctic and in Ukraine.
 
‎This is also coming days after the company slashed $5 billion from its investment budget and shut down its share buyback program as the crude price plunge continued to savage budgets of oil industry powerhouses.
Chevron said it would spend $35 billion on exploration and production projects, 13 percent less than last year, in response to the nearly 60 percent fall of the oil price since the middle of 2014 due to a global glut.
 
Explaining why the company discontinued it’s shale project in Poland Chevron said “the opportunities here no longer compete favorably with other opportunities in Chevron’s global portfolio.
 

Not only Chevron’s Polish unit has changed mind about the perspectives of shale drilling, Reuters points out.

Privately owned majors such as Exxon Mobil and Total did the same even earlier, as well as a number of smaller players of the energy market, considering downgraded estimates of shale gas reserves.

The energy prices nosedive in the end of 2014 forced international energy giants to exit ambitious projects they had been heavily investing into during the boom years.

ConocoPhillips, Husky Energy, Marathon Oil, Whitecap Resources and others have announced significant budget cuts for 2015.

In particular, Chevron discontinued several projects in recent months.

Chevron Canada Ltd suspended its oil drilling project in Beaufort Sea in the Arctic for an indefinite period due to economic uncertainty.
 
Also in December Chevron unilaterally exited the Oleska shale gas field project in Ukraine’s western Lvov Region because of the fall in oil and gas prices.
 

Chevron’s shale gas project in Romania is also in doubt. In November, the country’s prime minister, Victor Ponta, said that it looks like Romania “does not have shale gas.”

US rig count plunges

In the meantime the situation with shale drilling within the US mirrors the general negative trend worldwide with oil prices dropping more than 50 percent in less than six months.

According to the data presented by Baker Hughes oilfield service company, the number of drilling rigs in the US has sharply decreased since January 2014.

In a matter of just one week (January 23-30) the number of rigs operating within the US has fallen by 90 units, a record since Hughes initiated its monthly international rig count in 1975.

The year-on-year reduction of operating drilling rigs in the US has been 242 units, a cut of more than 13 percent.

According to Goldman Sachs analysis, the current US rig count drop is faster and larger than in any other bear market.
 

Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.

The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.

The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.

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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.

The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.

This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.

These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.

The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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By Yemie Adeoye

NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.

The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.

“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”

The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.

“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.

Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.

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Oil

ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.

Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”

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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.

Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.

We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.

“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.

On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.

 

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