The claims that Royal Dutch Shell owed billions in taxes to Nigeria could delay the development of a major oil field, the firm said Tuesday. Last week the FG had ordered oil giants, Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinor, to pay nearly $20 billion in taxes and outstanding royalties for oil and gas production in the country. According to Shell’s head of upstream Andy Brown, the company, largest investor in the country’s oil industry, would likely dispute the charges, stating that the issue has gone through the courts in Nigeria, which relates to an original clause within the original production sharing contracts. However, the firm said it will have to resolve the issue of the outstanding tax, which will delay the final investment decision on developing Shell’s Bonga Southwest deepwater oil field. It is one of Nigeria’s largest oilfields with production expected to reach 180,000 barrels per day.
GlobalData, a data and analytics organisation has tipped Nigeria and China as the major contributors to the global growth of refining industry capacity in planned and announced projects between 2019 and 2023. This projection was contained in the organisation’s latest report, which showed that the ongoing construction of the $12 billion Dangote refinery in Nigeria has enhanced the ranking of the country as one of the major contributors to global refining between 2019 and 2023. The refinery is expected to be on stream with 650,000 barrels per day in 2020. According to the report, the total global planned and announced refining capacity in 2023 will be 17,882 bopd. It stated that between the years in focus, 158 new refineries worldwide are scheduled to start operations and total new-build capital expenditure (capex) of around US$520 billion is expected to be spent globally on planned and announced refineries. China is expected to lead the global planned refining during the forecast period, with 3,121 bopd from 10 planned and announced refineries, before Nigeria the second largest country in terms of capacity additions, which by 2023 would add about 2,225 bopd of refining capacity. China has planned and announced a new capex of US$53.2 billion to be spent on the upcoming refineries over the next four years. Meanwhile, Dangote Oil Refining Company has begun installing equipment having received the regenerator for the Residual Fluid Catalytic Cracker, one of the major components of its refinery.
The results of the last Saturday’s presidential election weighed on the NSE on Tuesday as the market capitalisation of the listed equities shed ₦85 billion in six hours of trading. The equities market, which had closed positive on Monday, went down by 0.69 percent Tuesday with results trickling in suggesting a re-election of President Buhari. According to market analysts, investors during Tuesday’s trading were watchful, making effort to sell off some stocks so as not to be caught unawares. Specifically, the market capitalisation, which opened at ₦12.194 trillion, shed ₦85 billion or 0.69 percent to close at ₦12.109 trillion as the All-Share Index lost 226.30 points to close at 32,473.82.
Oil prices could rise further as OPEC output cuts and American sanctions on Iran and Venezuela cause a “shortage” of the low-quality heavy crudes refiners rely on, says Russell Hardy, CEO of Vitol Group. But this is cold comfort for Africa’s biggest oil producer whose major crude grades are high sulphur crudes. Hardy said in an interview with Bloomberg there is probably the potential for oil prices to be a little bit higher as oil supply is going to be pretty tight until Q3, but much of this demand increase will benefit low-quality crude grades as US shale producers, along with other producers including Nigeria, are pumping huge volumes of the high-quality crude, feeding a growing glut that is bearing down on demand. With an eye on the January 2020 deadline for the implementation of the new regulations from the International Maritime Organisation (IMO), where the sulphur limit for the shipping industry will fall to 0.5 percent among other calculations, including higher prices for sweet crude, refiners had made massive investments to build plants capable of processing large volumes of low-quality crude grades. However, this calculation seems way off the mark as sanctions by the United States on Iran and Venezuela, two of the world’s biggest producers of low-quality crude, are seeing the refiners scrambling. OPEC cuts too will also shut in more cheap crude grades coming from Saudi Arabia.