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Nigeria recorded biggest oil disruption in months, loses 7.5m barrels in January

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Nigeria has recorded its highest monthly crude oil loss in a long time as a result of disruptions due to maintenance, community issues and force majeure at the Forcados terminal.
Although the interruptions mainly occurred in December last year, it reverberated in the January activities of the Nigerian National Petroleum Company (NNPC), during which the firm was unable to contribute anything to the Federation Account.

In a document in which the national oil company explained its operations to the Federation Account Allocation Committee (FAAC), it told the body that the nation lost 7.503 million barrels during the month, in eight major incidents.

Nigeria’s upstream petroleum sector has struggled in the last one year, due to deteriorating facilities occasioned by waning investment as well as oil theft, sabotage and community issues.
With an average oil price for the month of January hovering at around $90, it is estimated that the country may have lost as much as $675 million to the phenomena during the period under review.
Forcados took the most hit during the period, with force majeure declared as a result on the terminal. The facility lost 4.640 million barrels during the 10-day period its activities were halted.

According to the NNPC, the force majeure was announced, following what it described as a serious incident involving a jack up barge in the vicinity of the facility, prompting the operator, Shell Petroleum Development Company (SPDC) to shut down the plant.

In drilling operations, Jack up barges, also known as jack up rigs, are used as a stable base for the construction and servicing of a variety of overwater structures, including drilling platforms, bridges and wind turbines.
While the shutdown of the Forcados terminal curtailed production within the period, it was followed by the Odudu and Ima terminal, where Nigeria lost 1.250 million barrels due to maintenance work.

At the Excravos facility, the NNPC said there were unresolved issues with South Swamp community, disrupting activities for several weeks, coupled with a number of other issues leading to the loss of 588,700 barrels of oil at a daily loss of 8,800 barrels.

Also at the Okan axis of the same asset, a leak occurred for weeks in which 11,500 barrels were lost per day.
At the Brass terminal, the country’s production was curtailed by 225,750 barrels during the disruption that lasted the whole month, due to shut down as a result of a flow line leakage, pressure build-up, high sand production, leak repairs, among others.

In addition, 420, 000 barrels were lost in the Yoho facility, which was shut down due to maintenance works, while Urha lost 276,000 barrels due to a turn-around-maintenance being carried out there, extending for a period of about 10 days.

The story was the same in Ajapa, where production was curtailed to the tune of 12,000 barrels during a period lasting a whole month, while Aje also lost crude oil barrels totalling about 91,000. Specifically, the entire losses during the period was 7,503,633 barrels.

Recently, a combination of huge oil pipeline repair cost and high-level theft of crude oil was bleeding out the Nigerian economy, with losses amounting to at least $29 billion in the last six years, spanning between 2015 and 2021.

In addition, during the latest presentation in February around its January activities, the extant NNPC document showed that the national oil company spent N1.056 billion on its pipeline repairs and maintenance.
Whereas N733 million was budgeted for pipeline maintenance in January, the NNPC presentation showed that the company expended N1.056 billion, exceeding its budget by N324 million.

But to ameliorate the problems, the firm recently announced that it had secured a $5 billion corporate finance commitment from the African Export-Import Bank (Afreximbank) to fund major investments in Nigeria’s upstream sector.

The funding commitment was sequel to a meeting between the Chairman of the Board of Directors and President of the Bank, Prof. Benedict Oramah and the NNPC Ltd team led by the Group Managing Director, Mallam Mele Kyari, in Cairo, Egypt.

Under the contract, Afreximbank agreed to enter into a finance advisory and fundraising role to raise $5 billion to “acquire, invest and operate energy producing assets in Nigeria as part of NNPC’s growth strategy following its incorporation as a limited liability company.”

Accordingly, the commitment from the finance would enable the NNPC to fund some of its major investments in the country’s upstream oil and gas sector, it was learnt.

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BUSINESS

Stock futures rise after Dow falls for 8th-straight week in relentless sell-off

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Stock futures rose early on Monday after the Dow Jones Industrial Average fell for its 8th straight week amid a broader market sell-off.

Futures on the Dow Industrial Average gained 245 points, or 0.78%. S&P 500 futures added 1.07% and Nasdaq 100 futures rose 1.19%.

The moves came after the S&P 500 on Friday dipped into bear market territory on an intraday basis. While the benchmark was down 20% at one point, it did not close in a bear market after a late-day comeback.

In Friday’s regular trading session, the S&P 500 closed 0.01% higher at 3,901.36 after falling as much as 2.3% earlier in the session. The Dow added 8.77 points at 31,261.90 after sinking as much as 600 points and the Nasdaq inched 0.3% lower.

The S&P 500 currently sits 19% off its record high while the Dow is down 15.4%. The Nasdaq is already deep in bear market territory, down 30% from its high.

Last week marked the Dow’s first eight-week losing streak since 1923, while the S&P 500 capped a seven-week losing streak, its worst since 2001.

The Nasdaq saw its seventh negative week in a row for the first time since March 2001. The tech-heavy index also saw its lowest intraday level since November 2020 on Friday.

Eight of 11 sectors ended the week in the red, led by consumer staples, which dipped 8.63% and had its worst weekly performance since March 2020. Energy finished the week on top, rising 1.09%. Consumer discretionary and communication services also finished the week more than 32% off their 52-week highs.

“Investors are trying to come to grips with what exactly is happening and always try to guess what the outcome is,” said Susan Schmidt of Aviva Investors. “Investors hate, and the markets hate uncertainty, and this is a period where they don’t have any clear indication on what’s going to happen with this push-pull between inflation and the economy.”

Investors are looking ahead to a new batch of earnings this week, including an array of big retail names. Zoom Video is set to report results Monday followed by Costco, Nvidia, Dollar General, Nordstrom and Macy’s later in the week.

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BUSINESS

US stocks suffer biggest daily drop in almost two years

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US stocks posted the biggest daily drop in almost two years as investors assess the impact of higher prices on earnings and prospects for monetary policy tightening on economic growth. The dollar and Treasuries gained amid a pickup in haven bids.

The selloff sent the S&P 500 down 4%, with the plunge in consumer shares surpassing 6%. Target Corp. tumbled more than 20% in its worst rout since 1987, after trimming its profit forecast due to a surge in costs. Shares of retailers from Walmart Inc. to Macy’s Inc. were caught in the downdraft. The Nasdaq 100 fell the most among major benchmarks, dropping more than 5% as growth-related tech stocks sank. Megacaps Apple Inc. and Amazon.com Inc. slid at least 5%.

Treasuries rose across the board, sending the 10- and 30-year Treasury yields down as much as 11 basis points. The dollar rose against all of its Group-of-10 counterparts, except the yen and Swiss franc. Gold caught bids in the move into havens.

The benchmark S&P 500 is emerging from the longest weekly slump since 2011, but any rebounds in risk sentiment are proving fragile amid tightening monetary settings, Russia’s war in Ukraine and China’s Covid lockdowns.

In some of his most hawkish remarks to date, Federal Reserve Chair Jerome Powell said Tuesday that the US central bank will raise interest rates until there is “clear and convincing” evidence that inflation is in retreat. Chicago Fed President Charles Evans said Wednesday he sees a half-point rate increase at next month’s meeting and “probably thereafter.”

In Europe, new-vehicle sales shrank for a 10th month in a row as the industry remains mired in supply-chain crises, while euro-area inflation plateaued at a record high. Meanwhile, UK inflation rose to its highest level since Margaret Thatcher was prime minister 40 years ago, adding to pressure for action from the government and central bank.

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Netflix lays off 150 employees due to slow revenue growth and business needs

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Netflix is reportedly laying off nearly 150 employees in the coming days due to disappointing earnings and slow revenue growth.

According to a Variety report, the Amazon Prime Video rival might also terminate its contract with contractual contributors.

The layoffs are about 2 per cent of Netflix’s US workforce. “As we explained [in reporting Q1] earnings, our slowing revenue growth means we are also having to slow our cost growth as a company. So sadly, we are letting around 150 employees go today, mostly U.S.-based,” a Netflix spokesperson said.

The statement further revealed that the decision was primarily driven by business needs rather than individual performance. Netflix reported $7.87 billion in Q1, which was short of Wall Street’s estimates of $7.93 billion.

The report further reveals that nearly 70 part-time employees in Netflix’s animation studio will have to pack up and leave. A report by The Verge stated that about 26 contractors working on Netflix’s fan-focused Tudum website might see a termination.

“A number of agency contractors have also been impacted by the news announced this morning. We are grateful for their contributions to Netflix,” the company said.

Netflix, in its recent earnings call, revealed that it lost thousands of subscribers, which is a first for the company in over a decade.

The company expects to lose an additional 2 million in the next quarter due to the ongoing war between Russia and Ukraine. Netflix has shut shop in Russia following the country’s invasion of Ukraine.

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