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Energy

ExxonMobil issues force majeure on Qua Iboe Terminal

Following the fire accident that led to the death of a worker, ExxonMobil has declared a force majeure on Qua Iboe terminal.

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Exxon Mobil to cut 14,000 jobs as pandemic hit oil demand, prices, ExxonMobil to Divest oil fields in Nigeria, Domestic oil companies

ExxonMobil has announced a force majeure on Nigeria’s Qua Iboe crude oil production, due to a fire incident that reportedly killed a worker and injured others.

This was disclosed in a statement by a spokesman of the company, reported by Reuters.

READ: Tank farm Fire: Incident will not disrupt product supply – MOMAN

Exxon did not reveal how much was lost to the fire incident at the Qua Iboe Terminal, and also did not indicate when exactly production will resume. However, the oil firm said that it never anticipated an impact on its operations at Qua Iboe.

An insider revealed to Reuters that the company expects operations to resume at the terminal in January 2021.

READ: NPA and BUA Group dispute to affect 1000 jobs, $500,000 monthly revenue 

READ: Inferno razes down SUBEB office in Ondo State

What they are saying

The company disclosed last week that,

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  • “On Dec. 13, Mobil Producing Nigeria experienced a fire at the process area of the Qua Iboe Terminal. Two employees were injured, one has passed in the course of receiving medical treatment… We are saddened by this unfortunate incident, and are providing support to the family.”

READ: Port Harcourt Refinery to get a facelift in Q1 2021 – NNPC

What you should know 

  • The Qua Iboe crude oil is produced from numerous offshore fields in the Bight of Biafra. The crude from fields 20 to 40 miles offshore from Nigeria’s South Eastern region, are brought to shore via a sea bed pipeline system to the Qua Iboe terminal.
  • The Qua Iboe Terminal is located on the eastern side of the Qua Iboe river estuary and contains nine crude oil storage tanks with a total capacity of 4.5 million bbls.

READ: Tanker explodes on Kara bridge, first responders attacked by hoodlums

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    Energy

    BUA Group awards contract for polypropylene plant in its refinery project

    The completion of the project is to help boost Nigeria’s capacity to meet the country’s increasing demand for petrochemical products.

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    BUA Group chairman, Abdulsamad Rabiu, African Continental Free Trade Agreement, AfCFTA, CCNN

    Nigeria’s leading indigenous conglomerate, BUA Group has announced that it has signed a contract agreement with Lummus Technology for the establishment of a polypropylene plant in its refinery and petrochemical project.

    The completion of the project is to help boost Nigeria’s capacity to meet the country’s increasing demand for petrochemical products.

    The Chairman of BUA Group, Abdul Samad Rabiu, while disclosing the contract agreement, expressed confidence in the capacity and technical expertise of Lummus Technology to deliver a best-in-class project.

    READ: BUA says its export-focused sugar project will create jobs and checkmate price hike

    What the Chairman of BUA Group is saying

    Rabiu in his statement said, “We are pleased to sign this polypropylene contract for our BUA refinery and petrochemicals project with Lummus Technology, a world leader in delivering polypropylene solutions, which will solve the increasing demand for high-performance grade polypropylene in Nigeria, the Gulf of Guinea as well as the Sub-Saharan Africa Region.

    “We are confident in the capacity and technical expertise of Lummus Technology to deliver a best-in-class, 285,000 tpy polypropylene unit for our refinery project scheduled to come on stream in 2024.’’

    READ: Dangote, BUA reconcile over sugar plant dispute after meeting with Ganduje, others

    What the President/Chief Executive Officer of Lummus Technology is saying

    On his part, the President/Chief Executive Officer of Lummus Technology, Leon de Bruyn, said that he was looking forward to working with BUA refinery on the project.

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    Leon said, “We look forward to working with BUA Refinery on this critical project and supporting the first Novolen polypropylene unit in Nigeria. Our world-class Novolen technology is well suited to meet Nigeria’s increasing demand for the growing petrochemical products market.

    It offers a flexible range of industry-leading products for all PP applications, and the industry’s lowest overall capital and operational costs while providing customers with high process reliability and flexibility in responding to market needs.”

    READ: BUA Group, French company announce progress in 200,000 bpd refinery project

    What you should know

    Lummus Novolen Technology GmbH licenses polypropylene technology and provides related engineering and technical support/advisory services. Novolen also supplies NHP® catalysts for the production of high-performance polypropylene grades in the Novolen process, and NOVOCENE® metallocene catalyst for the production of special polypropylene grades.

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    Currencies

    How rise in oil prices will impact exchange rate

    Oil prices are currently inching closer to $70 per barrel as the positive outlook of a return to global economic recovery swells investor sentiments.

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    Crude oil prices rebound ease investors’ concerns for Nigeria debt market, How substantial is compliance for the Oil market?, Crude Oil price soars high on new COVID-19 vaccine

    Nigeria, Africa’s top oil producer and home to the second-largest reserves on the continent, is expected to benefit from the rise in oil prices in many ways.

    Oil prices are currently inching closer to $70 per barrel as the positive outlook of a return to global economic recovery swells investor sentiments.

    Historically, there has been a strong positive correlation between crude oil prices and the performance of the Nigerian economy. For example, when oil prices plummeted due to the COVID-19 outbreak and the implementation of lockdown protocols in 2020, the Nigerian government scaled down the budget to align better with the drop in crude oil price.

    Now that there is a surge in oil price, we should expect that there would be an increase in government revenue translating to a stirring-up of aggregate demand.

    READ: Nigeria records highest trade deficit since 1981

    Why oil price is rising

    The OPEC+ output restrains, despite the strong recovery of oil consumption, continues to give formidable fitting to bullish sentiments about soaring oil prices.

    • Oil prices are rising as optimism about a strong rebound in fuel demand in developed countries overshadows concerns of full lockdown to curb covid-19 in India.
    • Oil (BRENT) has seen a 34.3% increase Year to Date with the oil price at $69.34 showing an increase of +1.15% as of the time of writing this article.

    What it means for the exchange rate

    Perhaps the greatest benefit of the recent oil price rise is exchange rate stability. Since the crash in oil prices began in late 2019, Nigeria’s official currency has faced a barrage of sell pressure as local and foreign investors increase demand for the dollar.

    This forced the central bank to curtain demand, implementing various forms of capital controls across the economy. With oil prices on the rise, Nigerians can begin to expect the following:

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    • An increase in government revenue, which also means higher dollar earnings and thus increased FX reserves. Nigeria’s FX reserve reportedly stands at $34.7 billion as of Tuesday, May 4th, 2021. Soaring oil prices strengthen the exchange rate and promote economic growth. This effect trickles down to higher reserves held by the CBN meant for stabilization of the currency.
    • Higher oil prices could also mean a more stable economy thus propelling economic growth. This, in turn, attracts foreign investor dollars or at least retains what we already have and reduces the pressure on demand.
    • Nigerians have intensified diversifying their currency holdings, keeping less of naira and holding more dollars as they hedge against depreciation. This has kept the pressure on the exchange rate over the last one and a half years. This trend could reverse if oil prices continue their steady rise.

    READ: Dangote: Cement price from our factories is between N2,450 and N2,510 per bag, VAT inclusive

    The implication? The parallel market exchange rate might appreciate closer to the NAFEX rate if this trend continues.

    Hence, it is safe to presume that as the world resume business and travel activities, the demand for Black Gold will continue to increase, and with supply held steady by OPEC+ we can speculate that this is enough catalyst to relieve the pressure of FX demand and increase our foreign reserves thereby propelling growth.

    However, the inclusivity of this growth may still be in question.

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