Henry defends Wenger
Arsenal legend Thierry Henry has defended boss Arsene Wenger over the manager’s decision to not sign an outfield player in the summer transfer window.
The Gunners only had one big arrival in former Chelsea goalkeeper Petr Cech, And they were the only club in the top five leagues in Europe to do so, yet Henry is uncertain whether the likes of Real Madrid hitman Karim Benzema or Paris Saint-Germain’s Edinson Cavani would want to come to England in the first place.
“I do not know if the boss wanted Benzema or not, but the player must also want to come,” he said.
“What are you going to offer to the guy who is playing for one of the best teams in the world, knowing that he is playing there week in, week out, and performing well?
“So I do not think that Arsene did not want to bring any other players – that would have been another story if he had really said: ‘I do not want to bring in any other players.’ But he said that if it can be done, then I will try to bring someone.
Since the beginning of the second half of
the year, oil prices began another round of steep decline to a six-year
low hovering within the $40 per barrel band towards August end. The
development has made a mess of every global or local prediction of
possible price recovery before year end.
Analysts at Goldman Sachs had predicted that American crude could
slide to $39 per barrel by July, but happened in August, adding that the
North Sea oil would also continue to decrease due to a saturated
market.
Besides the glut in the international oil market, the anticipated return of Iran to the global market and the crisis in the Chinese economy are helping to push oil prices even lower. China, world’s second largest economy, in addition to being a top oil consumer recently devalued its currency, Yuan, which saw about $5 trillion wiped off the global equity markets.
All around, from the rich-world to the emerging markets many economies are feeling the pinch of the free price falls. The Economists notes that despite the fact that the rich economies have regained some of their strength; the Chinese crisis now underscores the vulnerability of the emerging markets, a pointer that the malaise in the world economy is real.
For Nigeria, a mono-product country, which depends on oil proceeds to run the economy, the troubles are even more real. It’s been all gloom and doom since the beginning of the year when the oil price falls began. The Federal Government has had to change the budget price benchmark many times over until it settled for $53/barrel, with little idea that prices will fall to even below $40
Oil companies across the globe are counting their financial losses, leading to acute spending cutbacks and poor financial results. The poor returns from huge investments made during high oil price, apart from directly affecting capital and operating expenditures, also cast gloom on the impending second quarter results and short to medium term financial health of the companies.
Wake up call for Nigeria
The Director General, Emerald Energy Institute, University of Port Harcourt, Prof. Wunmi Iledare, insisted that the current financial crisis called for greater fiscal responsibility and transparency in the system.
Painting a gloomy picture of the crisis situation, he said: “Exploration has fallen, reserve addition is decreasing, and Nigerian cannot expand production because the market is saturated. So this will not only impact on the national budget but also impede on our rate of development because as a producer nation, if price falls further we will be in deficit.”
Consequently, he said, “Government must check further wastages, cut costs significantly and re-organise the economy. Although we cannot diversify overnight, government must get the oil and gas industry to be more connected with other sectors in the economy. The emphasis on revenues should be less, but more emphasis should be on the linkages with other sectors particularly agriculture.”
Unlike its peer in the Organisation of the Petroleum Exporting Countries, OPEC cartel, Nigeria failed to save for the rainy day during high oil price regime. Despite the oil price falls, countries like Saudi Arabia, United Arab Emirates, UAE, Kuwait and a host of others in the Middle East, are not planning to cut back on their investments.
Rather, the Arab producers, in spite of offering huge discounts to retain their respective oil market shares, will in fact, increase their investment in oil exploration and production in 2015 by 4.5 percent to $38.1 billion. (If proportional to output, the Saudi share would be $24.5 billion), according to Oilprice.com.
In particular, the Saudis boast that “the high oil revenue environment has spurred a boom in both oil and non-oil development projects.”
Nigeria, with very huge expenditure profile has been depleting its reserves, and as the President, Nigerian Association of Petroleum Explorationists, NAPE, Mr. Chikwe Edoziem, notes, cannot afford to offer as much discounts as the Arabs. He argued that “discounts will affect government’s ability to meet budget objectives,” which is heading towards deficits as Iledare predicts
Creating buffers
Against this backdrop, the Federal Government has been advised to consider offering longer period credit facility of up to 90 days to consumer nations as a way of helping Nigeria to wriggle out of the current oil price debacle. Also, Government, through the Nigerian National Petroleum Corporation, NNPC, should refrain from selling its crude in the spot market and negotiate for longer term contracts to boost its revenue drive.
These and a host of others are parts of the creative crude oil save strategies, experts urge government to adopt in the immediate to the long term periods to shore up revenues, beyond blocking the leakages in the system and increasing VAT rate in a falling oil price regime.
Industry experts, who spoke exclusively with Sweetcrude on the issue, also urged government to make the payment of its cash call, a first line charge in order to buoy exploration and production activities in the face of falling investments in the nation’s oil and gas industry.
Specifically, the Chairman/CEO of International Energy Services, IES, Ltd, Dr Diran Fawibe, in a telephone interview, said the credit facility to consumer governments will in the immediate term, mop up the Nigerian crude cargoes laying fallow in the high seas looking for buyers.
Reports say that about 15 Nigerian cargoes remained unsold as at July, despite the 10-year low price slash by NNPC for Bonny Light and Qua Iboe, to make the cargoes attractive to buyers.
Also, the bears run in the international oil market are anticipated to get worse, and will tighten government’s cash flow in the short to long term, even as currently many state governments are unable to pay workers’ salaries due to cash crunch on account of the falling oil prices.
Rather than slashing prices or offering huge discounts like the Arabs, Fawibe, a one-time Head of Crude Marketing Division, NNPC, said the credit facility offered a better alternative. “Government/NNPC can initiate government to government long term contracts. So where they will grant like 30 days credit to commercial or individual oil trading companies, they can grant the government’s 90 days facility, as a sort of incentive,” he said.
Cash call obligations
As a result, Fawibe insisted that in view of the dearth of investment in the petroleum sector, government should ensure it puts the payment of its cash calls on joint venture projects with the international oil companies, IOCs, on first line charge. Government is estimated to owe its joint venture partners about $7billion.
In his opinion, “Since there are no fresh investments by the IOCs, government should ensure that no matter what happens, it must pay its cash call obligations at all cost, so keep current projects running and retain the income streams. If the projects are stopped, as have been the case in a number of projects, then there will be less money for government, and lesser money to share among the states and local governments.”
Analysts also tied the NNPC’s inability to meet cash call obligations to its partners to the steep slide in oil revenue. They said: “The slump in exploration, development, and production activities mirrors the rising insecurity in producing areas (i.e. oil theft and pipeline sabotage) and, more importantly, NNPC’s funding cuts on JV projects (-40% YoY to $8.1 billion for 2015).”
Cash calls are requests for payment for anticipated future capital and operating expenditures, sent by joint venture operators (the IOCs) to non-operating partners (NNPC). Under the joint operating agreements, JOAs, the operator issues cash calls to NNPC for specific project(s) development.
Pruning governments’ expenditure
In view of the foregoing, experts who spoke to Sweetcrude, said the situation called for drastic pruning of government expenditures at all levels. Edoziem, for instance argued that “Government needs to manage its financial resources. Also the production process will have to be managed in such a way that you are making money because you don’t want to be investing and not make profit.”
Apart from meeting the cash calls, he suggested that government could “offer additional incentives that can help the companies to explore,” to keep investments running.
Financial performances
The continued fall in oil prices since the beginning of the year has been disastrous to the industry; stripping profitability from recently concluded investments, wiping commerciality off lean assets and slicing returns from commodities produced at high cost.
The adverse impacts of this are visible in the financial results of the industry players, with Italy’s biggest oil firm, Eni, reporting 84 percent profit dip in second quarter, Q2 results to disappointment of its shareholders. EniSpA said its oil-and-gas contractor unit Saipem, had earlier booked $1 billion in write downs.
BP Plc also reported the lowest quarterly profit in 10 years after a boom in trading faded and the conflict in Libya forced almost $600 million of write downs. Similarly, Royal Dutch Shell announced $3.8 billion in Q2 2015 earnings compared with $6.1 billion a year ago.
Chevron posted a massive year-on-year drop in earnings down to $571 million compared to $5.7 billion in Q2 2014. Its CEO, Mr. John Watson, explained that the company’s upstream business swung to a net loss of $2.22 billion from a profit of $5.26 billion.
World’s biggest oil company, ExxonMobil, also announced estimated Q2 2015 earnings of $4.2 billion, or $1 per diluted share, compared with $8.8 billion a year earlier or over 50 percent below the 2014 performance. The company CEO, Mr. Rex Tillerson, explained that upstream earnings were $2.0 billion in Q2 2015, down by $5.9 billion during same period of 2014.
Despite a number of new start-ups and associated income flows, French major, Total, equally posted a negative Q2 result of $3.1 billion or two percent below 2014 record when output was nearly half of its current volume.
In Nigeria where numerous small players rode on the wave of high oil prices, the financial performance outlook is frightening as the oil price burst combined with a plethora of other operating issues posted gloomy balance sheet.
Lagos and London quoted, Seplat Petroleum Development Company Limited, posted a 79 percent dive in profit, which its Managing Director, Mr. Austin Avuru, attributed to “oil price differences.”
London-listed Afren Plc, has declared bankruptcy and about to sell its Nigerian assets after riding on the surf of high oil prices to indulge in bullish assets acquisition across Africa with debt funds which can no longer be serviced under the current market realities.
Mart Resources, also appears to be losing its glow on key performance driver, and has offered to be acquired by its partners in the Umusadege marginal field.
A refinery
Besides the glut in the international oil market, the anticipated return of Iran to the global market and the crisis in the Chinese economy are helping to push oil prices even lower. China, world’s second largest economy, in addition to being a top oil consumer recently devalued its currency, Yuan, which saw about $5 trillion wiped off the global equity markets.
All around, from the rich-world to the emerging markets many economies are feeling the pinch of the free price falls. The Economists notes that despite the fact that the rich economies have regained some of their strength; the Chinese crisis now underscores the vulnerability of the emerging markets, a pointer that the malaise in the world economy is real.
For Nigeria, a mono-product country, which depends on oil proceeds to run the economy, the troubles are even more real. It’s been all gloom and doom since the beginning of the year when the oil price falls began. The Federal Government has had to change the budget price benchmark many times over until it settled for $53/barrel, with little idea that prices will fall to even below $40
Oil companies across the globe are counting their financial losses, leading to acute spending cutbacks and poor financial results. The poor returns from huge investments made during high oil price, apart from directly affecting capital and operating expenditures, also cast gloom on the impending second quarter results and short to medium term financial health of the companies.
Wake up call for Nigeria
The Director General, Emerald Energy Institute, University of Port Harcourt, Prof. Wunmi Iledare, insisted that the current financial crisis called for greater fiscal responsibility and transparency in the system.
Painting a gloomy picture of the crisis situation, he said: “Exploration has fallen, reserve addition is decreasing, and Nigerian cannot expand production because the market is saturated. So this will not only impact on the national budget but also impede on our rate of development because as a producer nation, if price falls further we will be in deficit.”
Consequently, he said, “Government must check further wastages, cut costs significantly and re-organise the economy. Although we cannot diversify overnight, government must get the oil and gas industry to be more connected with other sectors in the economy. The emphasis on revenues should be less, but more emphasis should be on the linkages with other sectors particularly agriculture.”
Unlike its peer in the Organisation of the Petroleum Exporting Countries, OPEC cartel, Nigeria failed to save for the rainy day during high oil price regime. Despite the oil price falls, countries like Saudi Arabia, United Arab Emirates, UAE, Kuwait and a host of others in the Middle East, are not planning to cut back on their investments.
Rather, the Arab producers, in spite of offering huge discounts to retain their respective oil market shares, will in fact, increase their investment in oil exploration and production in 2015 by 4.5 percent to $38.1 billion. (If proportional to output, the Saudi share would be $24.5 billion), according to Oilprice.com.
In particular, the Saudis boast that “the high oil revenue environment has spurred a boom in both oil and non-oil development projects.”
Nigeria, with very huge expenditure profile has been depleting its reserves, and as the President, Nigerian Association of Petroleum Explorationists, NAPE, Mr. Chikwe Edoziem, notes, cannot afford to offer as much discounts as the Arabs. He argued that “discounts will affect government’s ability to meet budget objectives,” which is heading towards deficits as Iledare predicts
Creating buffers
Against this backdrop, the Federal Government has been advised to consider offering longer period credit facility of up to 90 days to consumer nations as a way of helping Nigeria to wriggle out of the current oil price debacle. Also, Government, through the Nigerian National Petroleum Corporation, NNPC, should refrain from selling its crude in the spot market and negotiate for longer term contracts to boost its revenue drive.
These and a host of others are parts of the creative crude oil save strategies, experts urge government to adopt in the immediate to the long term periods to shore up revenues, beyond blocking the leakages in the system and increasing VAT rate in a falling oil price regime.
Industry experts, who spoke exclusively with Sweetcrude on the issue, also urged government to make the payment of its cash call, a first line charge in order to buoy exploration and production activities in the face of falling investments in the nation’s oil and gas industry.
Specifically, the Chairman/CEO of International Energy Services, IES, Ltd, Dr Diran Fawibe, in a telephone interview, said the credit facility to consumer governments will in the immediate term, mop up the Nigerian crude cargoes laying fallow in the high seas looking for buyers.
Reports say that about 15 Nigerian cargoes remained unsold as at July, despite the 10-year low price slash by NNPC for Bonny Light and Qua Iboe, to make the cargoes attractive to buyers.
Also, the bears run in the international oil market are anticipated to get worse, and will tighten government’s cash flow in the short to long term, even as currently many state governments are unable to pay workers’ salaries due to cash crunch on account of the falling oil prices.
Rather than slashing prices or offering huge discounts like the Arabs, Fawibe, a one-time Head of Crude Marketing Division, NNPC, said the credit facility offered a better alternative. “Government/NNPC can initiate government to government long term contracts. So where they will grant like 30 days credit to commercial or individual oil trading companies, they can grant the government’s 90 days facility, as a sort of incentive,” he said.
Cash call obligations
As a result, Fawibe insisted that in view of the dearth of investment in the petroleum sector, government should ensure it puts the payment of its cash calls on joint venture projects with the international oil companies, IOCs, on first line charge. Government is estimated to owe its joint venture partners about $7billion.
In his opinion, “Since there are no fresh investments by the IOCs, government should ensure that no matter what happens, it must pay its cash call obligations at all cost, so keep current projects running and retain the income streams. If the projects are stopped, as have been the case in a number of projects, then there will be less money for government, and lesser money to share among the states and local governments.”
Analysts also tied the NNPC’s inability to meet cash call obligations to its partners to the steep slide in oil revenue. They said: “The slump in exploration, development, and production activities mirrors the rising insecurity in producing areas (i.e. oil theft and pipeline sabotage) and, more importantly, NNPC’s funding cuts on JV projects (-40% YoY to $8.1 billion for 2015).”
Cash calls are requests for payment for anticipated future capital and operating expenditures, sent by joint venture operators (the IOCs) to non-operating partners (NNPC). Under the joint operating agreements, JOAs, the operator issues cash calls to NNPC for specific project(s) development.
Pruning governments’ expenditure
In view of the foregoing, experts who spoke to Sweetcrude, said the situation called for drastic pruning of government expenditures at all levels. Edoziem, for instance argued that “Government needs to manage its financial resources. Also the production process will have to be managed in such a way that you are making money because you don’t want to be investing and not make profit.”
Apart from meeting the cash calls, he suggested that government could “offer additional incentives that can help the companies to explore,” to keep investments running.
Financial performances
The continued fall in oil prices since the beginning of the year has been disastrous to the industry; stripping profitability from recently concluded investments, wiping commerciality off lean assets and slicing returns from commodities produced at high cost.
The adverse impacts of this are visible in the financial results of the industry players, with Italy’s biggest oil firm, Eni, reporting 84 percent profit dip in second quarter, Q2 results to disappointment of its shareholders. EniSpA said its oil-and-gas contractor unit Saipem, had earlier booked $1 billion in write downs.
BP Plc also reported the lowest quarterly profit in 10 years after a boom in trading faded and the conflict in Libya forced almost $600 million of write downs. Similarly, Royal Dutch Shell announced $3.8 billion in Q2 2015 earnings compared with $6.1 billion a year ago.
Chevron posted a massive year-on-year drop in earnings down to $571 million compared to $5.7 billion in Q2 2014. Its CEO, Mr. John Watson, explained that the company’s upstream business swung to a net loss of $2.22 billion from a profit of $5.26 billion.
World’s biggest oil company, ExxonMobil, also announced estimated Q2 2015 earnings of $4.2 billion, or $1 per diluted share, compared with $8.8 billion a year earlier or over 50 percent below the 2014 performance. The company CEO, Mr. Rex Tillerson, explained that upstream earnings were $2.0 billion in Q2 2015, down by $5.9 billion during same period of 2014.
Despite a number of new start-ups and associated income flows, French major, Total, equally posted a negative Q2 result of $3.1 billion or two percent below 2014 record when output was nearly half of its current volume.
In Nigeria where numerous small players rode on the wave of high oil prices, the financial performance outlook is frightening as the oil price burst combined with a plethora of other operating issues posted gloomy balance sheet.
Lagos and London quoted, Seplat Petroleum Development Company Limited, posted a 79 percent dive in profit, which its Managing Director, Mr. Austin Avuru, attributed to “oil price differences.”
London-listed Afren Plc, has declared bankruptcy and about to sell its Nigerian assets after riding on the surf of high oil prices to indulge in bullish assets acquisition across Africa with debt funds which can no longer be serviced under the current market realities.
Mart Resources, also appears to be losing its glow on key performance driver, and has offered to be acquired by its partners in the Umusadege marginal field.
Since
the beginning of the second half of the year, oil prices began another
round of steep decline to a six-year low hovering within the $40 per
barrel band towards August end. The development has made a mess of every
global or local prediction of possible price recovery before year end.
Analysts at Goldman Sachs had predicted that American crude could
slide to $39 per barrel by July, but happened in August, adding that the
North Sea oil would also continue to decrease due to a saturated
market.
Besides the glut in the international oil market, the anticipated return of Iran to the global market and the crisis in the Chinese economy are helping to push oil prices even lower. China, world’s second largest economy, in addition to being a top oil consumer recently devalued its currency, Yuan, which saw about $5 trillion wiped off the global equity markets.
All around, from the rich-world to the emerging markets many economies are feeling the pinch of the free price falls. The Economists notes that despite the fact that the rich economies have regained some of their strength; the Chinese crisis now underscores the vulnerability of the emerging markets, a pointer that the malaise in the world economy is real.
For Nigeria, a mono-product country, which depends on oil proceeds to run the economy, the troubles are even more real. It’s been all gloom and doom since the beginning of the year when the oil price falls began. The Federal Government has had to change the budget price benchmark many times over until it settled for $53/barrel, with little idea that prices will fall to even below $40
Oil companies across the globe are counting their financial losses, leading to acute spending cutbacks and poor financial results. The poor returns from huge investments made during high oil price, apart from directly affecting capital and operating expenditures, also cast gloom on the impending second quarter results and short to medium term financial health of the companies.
Wake up call for Nigeria
The Director General, Emerald Energy Institute, University of Port Harcourt, Prof. Wunmi Iledare, insisted that the current financial crisis called for greater fiscal responsibility and transparency in the system.
Painting a gloomy picture of the crisis situation, he said: “Exploration has fallen, reserve addition is decreasing, and Nigerian cannot expand production because the market is saturated. So this will not only impact on the national budget but also impede on our rate of development because as a producer nation, if price falls further we will be in deficit.”
Consequently, he said, “Government must check further wastages, cut costs significantly and re-organise the economy. Although we cannot diversify overnight, government must get the oil and gas industry to be more connected with other sectors in the economy. The emphasis on revenues should be less, but more emphasis should be on the linkages with other sectors particularly agriculture.”
Unlike its peer in the Organisation of the Petroleum Exporting Countries, OPEC cartel, Nigeria failed to save for the rainy day during high oil price regime. Despite the oil price falls, countries like Saudi Arabia, United Arab Emirates, UAE, Kuwait and a host of others in the Middle East, are not planning to cut back on their investments.
Rather, the Arab producers, in spite of offering huge discounts to retain their respective oil market shares, will in fact, increase their investment in oil exploration and production in 2015 by 4.5 percent to $38.1 billion. (If proportional to output, the Saudi share would be $24.5 billion), according to Oilprice.com.
In particular, the Saudis boast that “the high oil revenue environment has spurred a boom in both oil and non-oil development projects.”
Nigeria, with very huge expenditure profile has been depleting its reserves, and as the President, Nigerian Association of Petroleum Explorationists, NAPE, Mr. Chikwe Edoziem, notes, cannot afford to offer as much discounts as the Arabs. He argued that “discounts will affect government’s ability to meet budget objectives,” which is heading towards deficits as Iledare predicts
Creating buffers
Against this backdrop, the Federal Government has been advised to consider offering longer period credit facility of up to 90 days to consumer nations as a way of helping Nigeria to wriggle out of the current oil price debacle. Also, Government, through the Nigerian National Petroleum Corporation, NNPC, should refrain from selling its crude in the spot market and negotiate for longer term contracts to boost its revenue drive.
These and a host of others are parts of the creative crude oil save strategies, experts urge government to adopt in the immediate to the long term periods to shore up revenues, beyond blocking the leakages in the system and increasing VAT rate in a falling oil price regime.
Industry experts, who spoke exclusively with Sweetcrude on the issue, also urged government to make the payment of its cash call, a first line charge in order to buoy exploration and production activities in the face of falling investments in the nation’s oil and gas industry.
Specifically, the Chairman/CEO of International Energy Services, IES, Ltd, Dr Diran Fawibe, in a telephone interview, said the credit facility to consumer governments will in the immediate term, mop up the Nigerian crude cargoes laying fallow in the high seas looking for buyers.
Reports say that about 15 Nigerian cargoes remained unsold as at July, despite the 10-year low price slash by NNPC for Bonny Light and Qua Iboe, to make the cargoes attractive to buyers.
Also, the bears run in the international oil market are anticipated to get worse, and will tighten government’s cash flow in the short to long term, even as currently many state governments are unable to pay workers’ salaries due to cash crunch on account of the falling oil prices.
Rather than slashing prices or offering huge discounts like the Arabs, Fawibe, a one-time Head of Crude Marketing Division, NNPC, said the credit facility offered a better alternative. “Government/NNPC can initiate government to government long term contracts. So where they will grant like 30 days credit to commercial or individual oil trading companies, they can grant the government’s 90 days facility, as a sort of incentive,” he said.
Cash call obligations
As a result, Fawibe insisted that in view of the dearth of investment in the petroleum sector, government should ensure it puts the payment of its cash calls on joint venture projects with the international oil companies, IOCs, on first line charge. Government is estimated to owe its joint venture partners about $7billion.
In his opinion, “Since there are no fresh investments by the IOCs, government should ensure that no matter what happens, it must pay its cash call obligations at all cost, so keep current projects running and retain the income streams. If the projects are stopped, as have been the case in a number of projects, then there will be less money for government, and lesser money to share among the states and local governments.”
Analysts also tied the NNPC’s inability to meet cash call obligations to its partners to the steep slide in oil revenue. They said: “The slump in exploration, development, and production activities mirrors the rising insecurity in producing areas (i.e. oil theft and pipeline sabotage) and, more importantly, NNPC’s funding cuts on JV projects (-40% YoY to $8.1 billion for 2015).”
Cash calls are requests for payment for anticipated future capital and operating expenditures, sent by joint venture operators (the IOCs) to non-operating partners (NNPC). Under the joint operating agreements, JOAs, the operator issues cash calls to NNPC for specific project(s) development.
Pruning governments’ expenditure
In view of the foregoing, experts who spoke to Sweetcrude, said the situation called for drastic pruning of government expenditures at all levels. Edoziem, for instance argued that “Government needs to manage its financial resources. Also the production process will have to be managed in such a way that you are making money because you don’t want to be investing and not make profit.”
Apart from meeting the cash calls, he suggested that government could “offer additional incentives that can help the companies to explore,” to keep investments running.
Financial performances
The continued fall in oil prices since the beginning of the year has been disastrous to the industry; stripping profitability from recently concluded investments, wiping commerciality off lean assets and slicing returns from commodities produced at high cost.
The adverse impacts of this are visible in the financial results of the industry players, with Italy’s biggest oil firm, Eni, reporting 84 percent profit dip in second quarter, Q2 results to disappointment of its shareholders. EniSpA said its oil-and-gas contractor unit Saipem, had earlier booked $1 billion in write downs.
BP Plc also reported the lowest quarterly profit in 10 years after a boom in trading faded and the conflict in Libya forced almost $600 million of write downs. Similarly, Royal Dutch Shell announced $3.8 billion in Q2 2015 earnings compared with $6.1 billion a year ago.
Chevron posted a massive year-on-year drop in earnings down to $571 million compared to $5.7 billion in Q2 2014. Its CEO, Mr. John Watson, explained that the company’s upstream business swung to a net loss of $2.22 billion from a profit of $5.26 billion.
World’s biggest oil company, ExxonMobil, also announced estimated Q2 2015 earnings of $4.2 billion, or $1 per diluted share, compared with $8.8 billion a year earlier or over 50 percent below the 2014 performance. The company CEO, Mr. Rex Tillerson, explained that upstream earnings were $2.0 billion in Q2 2015, down by $5.9 billion during same period of 2014.
Despite a number of new start-ups and associated income flows, French major, Total, equally posted a negative Q2 result of $3.1 billion or two percent below 2014 record when output was nearly half of its current volume.
In Nigeria where numerous small players rode on the wave of high oil prices, the financial performance outlook is frightening as the oil price burst combined with a plethora of other operating issues posted gloomy balance sheet.
Lagos and London quoted, Seplat Petroleum Development Company Limited, posted a 79 percent dive in profit, which its Managing Director, Mr. Austin Avuru, attributed to “oil price differences.”
London-listed Afren Plc, has declared bankruptcy and about to sell its Nigerian assets after riding on the surf of high oil prices to indulge in bullish assets acquisition across Africa with debt funds which can no longer be serviced under the current market realities.
Mart Resources, also appears to be losing its glow on key performance driver, and has offered to be acquired by its partners in the Umusadege marginal field.
- See more at: http://www.vanguardngr.com/2015/09/feeling-the-pinch-of-oil-crash/#sthash.JQkTIQvB.dpuf
A refinery
Besides the glut in the international oil market, the anticipated return of Iran to the global market and the crisis in the Chinese economy are helping to push oil prices even lower. China, world’s second largest economy, in addition to being a top oil consumer recently devalued its currency, Yuan, which saw about $5 trillion wiped off the global equity markets.
All around, from the rich-world to the emerging markets many economies are feeling the pinch of the free price falls. The Economists notes that despite the fact that the rich economies have regained some of their strength; the Chinese crisis now underscores the vulnerability of the emerging markets, a pointer that the malaise in the world economy is real.
For Nigeria, a mono-product country, which depends on oil proceeds to run the economy, the troubles are even more real. It’s been all gloom and doom since the beginning of the year when the oil price falls began. The Federal Government has had to change the budget price benchmark many times over until it settled for $53/barrel, with little idea that prices will fall to even below $40
Oil companies across the globe are counting their financial losses, leading to acute spending cutbacks and poor financial results. The poor returns from huge investments made during high oil price, apart from directly affecting capital and operating expenditures, also cast gloom on the impending second quarter results and short to medium term financial health of the companies.
Wake up call for Nigeria
The Director General, Emerald Energy Institute, University of Port Harcourt, Prof. Wunmi Iledare, insisted that the current financial crisis called for greater fiscal responsibility and transparency in the system.
Painting a gloomy picture of the crisis situation, he said: “Exploration has fallen, reserve addition is decreasing, and Nigerian cannot expand production because the market is saturated. So this will not only impact on the national budget but also impede on our rate of development because as a producer nation, if price falls further we will be in deficit.”
Consequently, he said, “Government must check further wastages, cut costs significantly and re-organise the economy. Although we cannot diversify overnight, government must get the oil and gas industry to be more connected with other sectors in the economy. The emphasis on revenues should be less, but more emphasis should be on the linkages with other sectors particularly agriculture.”
Unlike its peer in the Organisation of the Petroleum Exporting Countries, OPEC cartel, Nigeria failed to save for the rainy day during high oil price regime. Despite the oil price falls, countries like Saudi Arabia, United Arab Emirates, UAE, Kuwait and a host of others in the Middle East, are not planning to cut back on their investments.
Rather, the Arab producers, in spite of offering huge discounts to retain their respective oil market shares, will in fact, increase their investment in oil exploration and production in 2015 by 4.5 percent to $38.1 billion. (If proportional to output, the Saudi share would be $24.5 billion), according to Oilprice.com.
In particular, the Saudis boast that “the high oil revenue environment has spurred a boom in both oil and non-oil development projects.”
Nigeria, with very huge expenditure profile has been depleting its reserves, and as the President, Nigerian Association of Petroleum Explorationists, NAPE, Mr. Chikwe Edoziem, notes, cannot afford to offer as much discounts as the Arabs. He argued that “discounts will affect government’s ability to meet budget objectives,” which is heading towards deficits as Iledare predicts
Creating buffers
Against this backdrop, the Federal Government has been advised to consider offering longer period credit facility of up to 90 days to consumer nations as a way of helping Nigeria to wriggle out of the current oil price debacle. Also, Government, through the Nigerian National Petroleum Corporation, NNPC, should refrain from selling its crude in the spot market and negotiate for longer term contracts to boost its revenue drive.
These and a host of others are parts of the creative crude oil save strategies, experts urge government to adopt in the immediate to the long term periods to shore up revenues, beyond blocking the leakages in the system and increasing VAT rate in a falling oil price regime.
Industry experts, who spoke exclusively with Sweetcrude on the issue, also urged government to make the payment of its cash call, a first line charge in order to buoy exploration and production activities in the face of falling investments in the nation’s oil and gas industry.
Specifically, the Chairman/CEO of International Energy Services, IES, Ltd, Dr Diran Fawibe, in a telephone interview, said the credit facility to consumer governments will in the immediate term, mop up the Nigerian crude cargoes laying fallow in the high seas looking for buyers.
Reports say that about 15 Nigerian cargoes remained unsold as at July, despite the 10-year low price slash by NNPC for Bonny Light and Qua Iboe, to make the cargoes attractive to buyers.
Also, the bears run in the international oil market are anticipated to get worse, and will tighten government’s cash flow in the short to long term, even as currently many state governments are unable to pay workers’ salaries due to cash crunch on account of the falling oil prices.
Rather than slashing prices or offering huge discounts like the Arabs, Fawibe, a one-time Head of Crude Marketing Division, NNPC, said the credit facility offered a better alternative. “Government/NNPC can initiate government to government long term contracts. So where they will grant like 30 days credit to commercial or individual oil trading companies, they can grant the government’s 90 days facility, as a sort of incentive,” he said.
Cash call obligations
As a result, Fawibe insisted that in view of the dearth of investment in the petroleum sector, government should ensure it puts the payment of its cash calls on joint venture projects with the international oil companies, IOCs, on first line charge. Government is estimated to owe its joint venture partners about $7billion.
In his opinion, “Since there are no fresh investments by the IOCs, government should ensure that no matter what happens, it must pay its cash call obligations at all cost, so keep current projects running and retain the income streams. If the projects are stopped, as have been the case in a number of projects, then there will be less money for government, and lesser money to share among the states and local governments.”
Analysts also tied the NNPC’s inability to meet cash call obligations to its partners to the steep slide in oil revenue. They said: “The slump in exploration, development, and production activities mirrors the rising insecurity in producing areas (i.e. oil theft and pipeline sabotage) and, more importantly, NNPC’s funding cuts on JV projects (-40% YoY to $8.1 billion for 2015).”
Cash calls are requests for payment for anticipated future capital and operating expenditures, sent by joint venture operators (the IOCs) to non-operating partners (NNPC). Under the joint operating agreements, JOAs, the operator issues cash calls to NNPC for specific project(s) development.
Pruning governments’ expenditure
In view of the foregoing, experts who spoke to Sweetcrude, said the situation called for drastic pruning of government expenditures at all levels. Edoziem, for instance argued that “Government needs to manage its financial resources. Also the production process will have to be managed in such a way that you are making money because you don’t want to be investing and not make profit.”
Apart from meeting the cash calls, he suggested that government could “offer additional incentives that can help the companies to explore,” to keep investments running.
Financial performances
The continued fall in oil prices since the beginning of the year has been disastrous to the industry; stripping profitability from recently concluded investments, wiping commerciality off lean assets and slicing returns from commodities produced at high cost.
The adverse impacts of this are visible in the financial results of the industry players, with Italy’s biggest oil firm, Eni, reporting 84 percent profit dip in second quarter, Q2 results to disappointment of its shareholders. EniSpA said its oil-and-gas contractor unit Saipem, had earlier booked $1 billion in write downs.
BP Plc also reported the lowest quarterly profit in 10 years after a boom in trading faded and the conflict in Libya forced almost $600 million of write downs. Similarly, Royal Dutch Shell announced $3.8 billion in Q2 2015 earnings compared with $6.1 billion a year ago.
Chevron posted a massive year-on-year drop in earnings down to $571 million compared to $5.7 billion in Q2 2014. Its CEO, Mr. John Watson, explained that the company’s upstream business swung to a net loss of $2.22 billion from a profit of $5.26 billion.
World’s biggest oil company, ExxonMobil, also announced estimated Q2 2015 earnings of $4.2 billion, or $1 per diluted share, compared with $8.8 billion a year earlier or over 50 percent below the 2014 performance. The company CEO, Mr. Rex Tillerson, explained that upstream earnings were $2.0 billion in Q2 2015, down by $5.9 billion during same period of 2014.
Despite a number of new start-ups and associated income flows, French major, Total, equally posted a negative Q2 result of $3.1 billion or two percent below 2014 record when output was nearly half of its current volume.
In Nigeria where numerous small players rode on the wave of high oil prices, the financial performance outlook is frightening as the oil price burst combined with a plethora of other operating issues posted gloomy balance sheet.
Lagos and London quoted, Seplat Petroleum Development Company Limited, posted a 79 percent dive in profit, which its Managing Director, Mr. Austin Avuru, attributed to “oil price differences.”
London-listed Afren Plc, has declared bankruptcy and about to sell its Nigerian assets after riding on the surf of high oil prices to indulge in bullish assets acquisition across Africa with debt funds which can no longer be serviced under the current market realities.
Mart Resources, also appears to be losing its glow on key performance driver, and has offered to be acquired by its partners in the Umusadege marginal field.
- See more at: http://www.vanguardngr.com/2015/09/feeling-the-pinch-of-oil-crash/#sthash.JQkTIQvB.dpuf
![[PICS+ VIDEO]: #BBATheChase: Bolt and Betty SMOOCHING During Shower Time [18+]](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjoeE_nzH0p-2-GczlC3mx5MYCzLfaWTE9yHnmbOmcMCQITDfxF-QShbCZ1u6tIOsVyMJPoNi4MsWlZCIaWKxb-ae3FxNe8pEZNIsA5zZsYGFxIePFVar73uWcceffBNgoB6f6tG3zWCmuY/s72-c/bba1.png)
![FRESH: [Video + Audio]: Felix Akara(@FelixAkara) - NDOKI BOY](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwS191iH6mgI62Q4o_Qd8U6RscjVDYh2oZIKWLKOwX0abrHfzGbG-qMpsXrHs-zDrEoyVlJAACyRjmAM_86oBFYv3USJZmxUu7gb8G7OiRbpgH_tWAq9eOTgumtxncOIO1YF0qhSxgKtHT/s72-c/car+strategy3.jpg)
No comments:
Please note that comments are reactions from readers which has nothing to do with the Admin. Thank You