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UPDATED: Rivers acquires Shell’s 45% stake in Ogoni land 

River State Government has just gotten Shell’s 45% stake in Oil Mining Lease 11

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JUST IN: Rivers gets Shell's 45% stake in Ogoniland 

River State Government has just acquired Shell’s 45% stake in Oil Mining Lease 11, situated in Eleme and other parts of Ogoni land. 

This was revealed by the Governor of the State, Nyesom Wike in a broadcast from the State Government House, BrickHouse in Port Harcourt. 

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I am delighted to inform you that the Rivers State Government has fully acquired Shell Petroleum Development Company of Nigeria (SPDC) 45% interest in OML 11 situated in Ejama Ebubuo community in Eleme Local Government Area and the adjoining Ogoni and other communities of Rivers State,” Wike said.

[READ MORE: NNPC transfers stake in four oil wells to NPDC]

What you should know: Ever since the death of Ken Saro Wiwa and the Ogoni 9, the Oil Mining lease 11 has been underdeveloped for close to 25 years.

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The oil field is part of Shell’s several onshore assets that the oil giant has been looking to sell in Nigeria. A couple of deals failed due to the tensions that occurred.

Wike revealed that a bid of $150 million was made for the purchase of Shell’s stakes after they were placed on auction following an extant order of the Court.

The Oil Mining Lease 11 has the capacity to produce 250,000 barrels per day (bpd).

In August, A Federal High Court in Abuja instructed The Minister of Petroleum Resources, President Muhammadu Buhari to grant the renewal of the Oil Mineral Lease (OML) 11 license to the Shell Petroleum Development Company of Nigeria.

The renewal was expected to last for 20 years even though a renewal of 30 years was requested by the company.

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[FURTHER READ: NNPC yet to receive notice of OML 11 takeover from Presidency]

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Why this matters: The oil block has caused protracted disputes between the people of Ogoniland and Shell over the degradation of their environment. The root cause of the dispute is historic due to the death of Ken Saro Wiwa and 9 others which forced the local arm of Shell to abandon activities in the Ogoni section of the lease.

The Federal Government tried to intervene in the matter and directed the Nigerian National Petroleum Commission (NNPC) to take over the entire OML 11 from Shell Petroleum Development Company in March 2019. It also refused to renew Shell’s operating license.

 

Reincarnated as a lover of stocks, Angel investors, seed funds, and anything aligned to tech or startups raising money, Joseph's work at Nairametrics involves following the money to wherever it leads. Before joining Nairametrics, he won an investigative journalism fellowship with ICIR, appeared in several national dallies, with hard-hitting opinions, features and investigative pieces. He has also engaged in content marketing and copywriting for a top e-commerce firm in Nigeria.

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Business News

Hedge funds, institutional investors rush to own stakes in Bitcoin

Hedge funds are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.

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Bitcoin users rise in Nigeria despite Senate, CBN campaign against it, Nigerians losing millions to crypto fraud, Investing in cryptocurrencies in this economic shutdown, Bitcoin could hit above $100,000 by August 2021, Hedge funds, Institutional investors rush to have a stake in Bitcoin

With global economic uncertainty gradually becoming a daily norm, institutional and hedge funds around the world have been rushing to have a stake in crypto assets which  all have been outperforming other financial assets in 2020).

Just recently, a popular hedge fund based in New York –Grayscale Investments –caught the investment world by surprise by buying up Bitcoin (BTC) at a great rate in recent months.

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Lennard Neo, the head of research at Stack Funds, told Cointelegraph that institutional investors have been seeking for other options, not just to provide returns, but also to hedge their existing portfolio from downside risks. Neo said:

“Similar to Grayscale, Stack has seen an uptick in investors’ interest — almost double that figures of pre-crash in March — in Bitcoin. I would not say they are ‘gobbling up BTC’ blindly but cautiously seeking traditional structured solutions that they are familiar with before making an investment.” 

(READ MORE:The Empirical Truth about an average Nigerian’s price point)

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In addition, Paul Cappelli, a portfolio manager at Galaxy Fund Management, explained in detail the reasons for this demand. According to him, “we’re seeing increased interest from multiple levels of investors’ wealth channels, independent RIAs, and institutions.

“The recent BTC halving came at an interesting time amid the COVID-19 outbreak and the growing unease about quantitative easing. He noted: “It clearly demonstrated BTC’s scarcity and future supply reduction as concerns deepened around unprecedented stimulus by the Fed with the CARES Act.” 

Also, Michael Sonnenshein, the Managing Director of Grayscale Investments, explained briefly why his firm uses Bitcoin as an option in hedging its firm’s portfolio position.

“All three are facing issues this time around. Bitcoin has emerged as an alternative hedge, operating independently of the dramatic monetary policies enacted by central banks,” he said.

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What you need to know about Hedge Funds

They are firms that offer alternative investments to a specific type of investors (high net worth individuals), in a bid to protect their investment portfolios from market uncertainty, while generating positive returns regardless of market sentiments.

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Business News

Measures introduced by Nigeria to ensure transparent use of the $3.4 billion IMF loan

Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.

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Kristalina Georgieva, IMF boss hints at 'synchronized slowdown' in global growth , IMF: 40% of African countries can't pay back their debts , Nigeria worse off, posts grows lower than LIDC benchmark - IMF, Measures introduced by Nigeria to ensure transparent use of the $3.4b IMF loan

Following the approval and disbursement of $3.4 billion Rapid Financing Instrument (RFI) to Nigeria, which is the largest COVID-19 emergency financing package so far released by the International Monetary Fund (IMF), the multilateral financial institution now expects transparent and accountable use of the funds.

The IMF’s financial assistance to Nigeria is meant to support the healthcare sector, stabilise the economy, and protect jobs and businesses that have been severely impacted by the pandemic.

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The Bretton wood institution has been disbursing funds to work closely with member countries to ensure transparent and judicious use of the financial support, while making sure they are used for the intended purpose.

The IMF’s mission chief for Nigeria, Amine Mati, during a conversation, pointed out the measures to be taken by Nigeria in order to enhance transparency and governance in the use of the $3.4 billion IMF emergency financing.

(READ MORE: Infrastructural financing in Nigeria: Why bonds are better than loans)

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According to the IMF chief, the Nigerian Government had committed to undertake an independent audit of crisis mitigation spending and related procurement processes, as well as to publish procurement plans and notices for all emergency response activities which include the names of companies that were awarded the contracts and the beneficial owners.

Mr. Mati also disclosed that special budget lines are to be created to record all crisis emergency response measures, which are published daily on Nigeria’s treasury online portal. These measures will not only ensure that financial assistance received as part of the COVID-19 response is used for its intended purposes, but will also significantly strengthen the oversight of the entire budget used for the government’s crisis response.

Implementing these measures will help to drastically reduce the governance and transparency challenges as well as corruption vulnerabilities of a country like Nigeria. Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.

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Economy & Politics

Brent crude drops, as traders focus on OPEC+ meeting

OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day in May and June after the deadly COVID-19 pandemic weakened demand. 

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Brent crude drops to $25, oil demand drops by about 10% of world’s consumption, Brent Crude Oil hits $26, as Nigeria's Sweet Crude demand falls, Oil price pushes up before OPEC meeting, Asian equity markets mixed, NIGERIA OIL: Darker days ahead as Brent falls below production cost, Brent crude drops, as oil traders focus on OPEC+ meeting

Brent crude price dropped by around 0.77%, to $37.55 a barrel, on the first trading session of June.

The slump in the price comes after it posted its strongest monthly gains since 1999.

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“The focus is very much on OPEC+,” OCBC economist, Howie Lee, told  Reuters referring to OPEC and its allies including Russia. OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day in May and June after the deadly COVID-19 pandemic weakened demand.

“We might see a cautious pullback in (crude) prices given that downstream prices haven’t caught up … but if OPEC+ does come up with a three-month extension, there’s a possibility that prices may hit the $40 level,” Howie Lee added.

Algeria, which presently holds the OPEC presidency, has started a move that an OPEC+ meeting scheduled for June 9-10 be brought forward to ease oil purchases for countries such as Saudi Arabia, Iraq, Kuwait, and Russia, who raised no objection.

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(READ MORE: Global oil prices drop after reports of unexpected inventory build)

“It’s been widely interpreted as likely to lead to an extension of the current production cuts,” CMC Markets’ chief market strategist, Michael McCarthy, said. 

“Oil prices have come down slightly in our session but they’re still at elevated levels. I suspect that’s the key driver of prices on Friday night and should keep prices reasonably well supported today,” McCarthy added.

 

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