Earnings season is in full swing, and we might be watching intently to see what second-quarter numbers this week say concerning the well being of the business’s supermajors. BP beat expectations because of a decrease tax invoice this morning. Shell will report on Thursday, whereas America’s oil giants, ExxonMobil and Chevron, observe on Friday.
Weak refining margins are set to be a central theme: each TotalEnergies and BP took hits in this space and Exxon has flagged that it expects to as properly.
Exxon and Chevron, in the meantime, will face questions on their stand-off over a profitable Guyanese oil discover, although any near-term decision appears unlikely.
In non-oil information, my colleague Amanda Chu travelled to Ohio to report on efforts to ascertain subsequent era photo voltaic know-how in the US as a part of a push to compete with China’s dominance in photovoltaics. Check out her dispatch right here.
As ever, thanks for studying. — Myles
Nigeria’s Dangote refinery embroiled in billionaire’s spat with regulators
Aliko Dangote’s $20bn oil refinery was imagined to be a “game-changer” for Nigeria.
The eponymous venture, first conceived a decade in the past and accomplished final 12 months after delays and price overruns, was billed because the defining plant that would wean Nigeria off its dependence on imported refined petroleum merchandise. Despite its standing as Africa’s largest oil producer, Nigeria is unable to refine its crude domestically and spends billions of {dollars} yearly importing completed merchandise.
But little goes to plan. The usually taciturn Dangote has spent the previous few weeks briefing the press on developments at his 650,000 barrel a day refinery after an business regulator accused him of being a monopolist, an accusation he denies. The long-running suspicions of tensions between the well-connected billionaire and the administration of President Bola Tinubu additionally refuse to go away.
The refinery has been beset by varied issues. The plant, which now produces diesel, aviation gas and naphtha, has struggled to safe ample crude to extend manufacturing, forcing it to show to far-flung locales equivalent to Brazil and the US for its provides.
“Given that the crude is produced here by companies that are registered in Nigeria and is being sold to a refinery in Nigeria, we believe that it would be more efficient for the transaction to be done between the two entities directly rather than through an international middleman who in this case we don’t see as adding any value,” he mentioned.
The monopolisation allegation from the top of the Nigerian Midstream and Downstream Regulatory Authority, has worsened ties between the billionaire and the state.
Farouk Ahmed, the company head, claimed Dangote had requested Nigeria to dam the importation of diesel and aviation gas at hand his refinery a bonus. Ahmed additionally alleged that Dangote’s diesel was “inferior to the imported quality. Dangote insists his diesel is the “best diesel in Nigeria”.
Dangote has since deserted a deliberate metal plant that was introduced earlier this 12 months, saying he wished to keep away from being dubbed a monopolist.
There’s additionally a spat with NNPC, Nigeria’s state-owned oil firm, which three years in the past paid $2.7bn for a 20 per cent stake in the Dangote refinery. NNPC just lately had its share whittled right down to 7.2 per cent after Dangote mentioned it didn’t pay the stability of what it owed — largely crude provides of 300,000 bpd over a number of years. NNPC refuted Dangote’s assertion, claiming it had capped its fairness in the venture as a part of a periodic evaluation of its funding portfolio to make sure alignment with its “strategic goals”.
Suleiman mentioned the monopoly accusations have been weightier as a result of they got here from a regulator. “If the regulator himself is making that statement, it can be seen almost as a statement that has come from the government and that’s what makes this different,” he mentioned, whereas insisting that Dangote Group maintained a “very good relationship with the government on many facets”.
A presidential spokesperson mentioned on Monday that Tinubu had ordered the NNPC to promote crude to Dangote in the native naira foreign money. Details of the supposed deal are unknown.
“There is a concerted effort against the refinery,” mentioned Suleiman.
“There is a value chain that has existed for many years that supplies petroleum products into Nigeria. That value chain is being somewhat disrupted.”
Suleiman mentioned the worth chain included international refineries, Nigerian merchants and others concerned in the importation of gas into the nation. “As a result there is pushback from various players that perceive — rightly or wrongly — that the economics of their operations will now be negatively impacted,” he mentioned. (Aanu Adeoye)
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Nick Hedley, a South Africa-based journalist and editor of The Progress Playbook, raised some nuanced factors in response. Here’s what he needed to say:
The new head of the nation’s energy utility Eskom is quoted as saying a coal plant repurposing venture had created an “atomic bomb scenario” for native jobs, and it’s implied that this was a results of South Africa’s simply energy transition partnership with rich nations. This isn’t the case.
In reality, the decommissioning course of on the Komati coal-fired energy plant started way back to 2017, when a choice was taken to now not make investments in the ageing plant’s maintenance. This was years earlier than South Africa agreed to an $8.5bn local weather finance deal.
Eskom says none of its employees at Komati have been laid off — many have been redeployed elsewhere. But the interim interval between the plant’s shutdown and the change to wash energy has made life robust for the local people, with guesthouses and Eskom suppliers seeing their revenues all however dry up.
However, in the previous, when Eskom decommissioned coal crops, it merely walked away and left native communities stranded. This time round, it determined — albeit far too late — to make use of Komati as a check mattress for future repurposing actions. Local group leaders say they help the imaginative and prescient for the positioning, whilst pro-coal politicians twist the narrative to gas a backlash towards the venture and the broader simply energy transition programme.
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Unlike a lot of its non-public fairness rivals Carlyle nonetheless has an urge for food for fossil fuels.
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