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Business News

Total suspends Mozambique $20 billion LNG project indefinitely, declares force majeure

The suspension follows an escalation of violence in the area, which includes jihadist attack by Islamic State-linked militants.

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Total Nigeria caught in the oil demand and lockdown saga

French energy giant Total SE has announced the indefinite suspension of its $20 billion liquefied natural gas (LNG) project in Mozambique due to an escalation of violence in the area, which includes jihadist attack by Islamic State-linked militants.

The oil firm also said that the fresh outbreak of violence in the north of the Cabo Delgado province has led Total to declare a force majeure, a legal concept meaning that it can suspend fulfilling its contractual obligation, as that is the only way to best protect the interest of the project until work resumes.

According to a report from Bloomberg, this disclosure is contained in a statement issued by Total on Monday, April 26, 2021.

READ: Train 7 project: NLNG reacts after NNPC, others delay decision 

The decision is a blow to Total, which bought a 26.5% stake in the project for $3.9 billion in 2019 with the hope of starting the export of super-chilled fuel by the end of 2024 just as the increasing violence is also a setback for Mozambique, which is now losing out on jobs and revenue from the gas sales.

Last week, the Confederation of Economic Associations of Mozambique (CTA) said Total had suspended contracts with a series of businesses indirectly involved in the gas project as the association’s president, Agostinho Vuma, said that Total had assured that the gas project would resume once it is safe.

READ: What the ANOH deal means for Nigeria’s energy market 

Security threat

On March 24, some hours after Total said it was resuming work on the project, stalled since January because of security threats, over 100 rebels raided the town of Palma with dozens of people killed, millions of dollars of property damaged and the company immediately suspending plans to resume the project.

The project had been gaining momentum as Total acquired the operator stake from Anadarko Petroleum Corp. in 2019. The company was making progress on early construction, including an airport along with accommodations for workers. Just at the same time, an insurgency was rising in Cabo Delgado province.

READ: FLNGs as the future: Too soon to call?

According to reports, the violence has left at least 2,780 people dead and also displaced over 700,000 people. While the government has pledged to restore peace, attacks have grown closer to the site, resulting in the evacuation of workers.

This has raised serious doubts over the viability of the project which is the biggest single investment in Africa even before the latest raid.

What you should know

Mozambique LNG had completed nearly $16 billion in funding by July last year, involving several banks, despite a slowdown in energy investment as the coronavirus hammered the global economy.

The LNG project includes the development of the Golfinho and Atum offshore natural gas fields and the construction of a two-train liquefaction plant with a capacity of 13.12 million tonnes per annum.

Jaiz bank

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Business News

Nigeria’s revenue crisis may further worsen as India cuts oil imports by $39.5 billion

The revenue to be earned by Nigeria has come under further threat due to India’s drop in crude oil importation.

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Now that oil is recovering, when will naira recover?

The revenue to be earned by Nigeria has come under further threat due to India’s drop in crude oil importation.

Data from India’s Petroleum Planning and Analysis Cell showed that the country, which took over from the United States as Nigeria’s largest crude oil importer, reduced crude oil imports by $39.5 billion in April, compared to the same time the previous year.

According to a report from Punch, the Indian High Commission in Nigeria said that India’s crude oil imports from Nigeria in 2020 amounted to $10.03 billion, representing 17% of Nigeria’s total crude exports for the year.

India has been badly hit by a third wave of the coronavirus pandemic which led to a spike in infections in April and lockdown in major cities with the attendant negative effect on Nigeria’s oil sales.

The NNPC was prompted to drop the official standard price of its main export streams, Bonny Light, Brass River, Erha, and Qua Iboe, by 61-62 cents per barrel, below its April 2021 prices. They traded at $0.9, $0.8, $0.65, $0.97 per barrel respectively, below international benchmarks, as Oilprice.com showed.

India had been a major buyer of the not-too-light and not-too-heavy Nigerian crude that suited its refiners with the Indian Oil Corporation’s refineries reported to be operating at 95% capacity in April, down from 100%.

An official at the IOC was quoted as saying, “If cases continue to rise and curbs are intensified, we may see cuts in refinery runs and lower demand after a month.”

India reportedly bought more American and Canadian oil at the expense of Africa and the Middle East, reducing purchases from members of the Organisation of Petroleum Exporting Countries (OPEC) to around 2.86 million barrels per day.

Bottom line

This is not good news for Nigeria which is facing a serious revenue crisis as a result of a drop in crude oil receipts.

The federal government is also being forced by the prevailing realities to consider cutting the cost of governance and reducing the salaries of government workers. The latter proposal has, however, been criticized by various stakeholders.

A slump in crude oil demand from Nigeria’s major buyer will further worsen the economic crisis the country is facing having just marginally recovered from a recession in the last quarter of 2020.

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Business

Insecurity: Police to investigate threats by IPOB, Oodua Republic agitators in Lagos

The Lagos State Police Commissioner has revealed that threats by IPOB and Oodua Republic have come under its intelligence radar.

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The Nigerian Police says it will investigate threats made by separatist groups including the Indigenous People of Biafra (IPOB) and agitators of Oodua Republic to attack soft targets in Lagos.

This was disclosed by Hakeem Odumosu, Commissioner of Police in Lagos State in a meeting to discuss insecurity in the state at Alausa in Ikeja, on Monday, according to a Vanguard report.

What the Police is saying about alleged IPOB and Oodua Republic threats in Lagos

“Our intelligence report revealed that, most miscreants now: Use abandoned buildings as hideouts and in most cases, initiation camp, use uncompleted buildings, dwelling house and hotels to hibernate before and after the commission of a crime,” the Police Chief said.

Furthermore, the threat of IPOB to attack soft targets in Lagos is equally being put on the radar of the command intelligence gathering and other security services in the state. Strategies are being put in place to neutralize their activities.

Similarly, the command has taken notice of agitators for the Oodua Republic by some Yoruba separatist groups and the threats to disrupt law and order in the state. 24 of these groups have been identified and are being closely monitored.

The command is using this medium to solicit for the support of all and sundry to be vigilant at all times and report any suspicious person or movement to security agencies. Let us adopt the slogan of “when you see something, say something,” he added.

What you should know

Today, the Lagos State Police Command said in a statement that: “Increase in robbery incidents were as a result of people migrating from troubled states down to Lagos. The government and relevant security agencies including RRS are doing their best in protecting members of the public.”

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