Nigeria’s oil sector loses $17.12m to investors’ apathy
Nigeria has suffered a plunge of $17.12 million foreign investment in its oil industry in just three months.
Investigations showed that investor apathy, which trailed the petroleum industry from August to September 2018, has been listed as the cause of the plunge – highest since the first quarter of 2016.
Foreign capital inflow in the industry, documents of the Ministry of Petroleum Resources showed, dipped by 68.9 per cent to $7.73 million in the third quarter compared with $24.85 million foreign capital recorded in the second quarter of 2018.
The value of foreign capital inflow into the petroleum industry in the third quarter of 2018, the document read, was 51.9 per cent lower than the $16.07 million in the third quarter of 2017.
Noting that the foreign capital inflow into the petroleum industry in the third quarter of 2018 accounted for 0.27 per cent of total foreign investment inflow into the Nigerian economy in the quarter under review, the report also revealed that the value of foreign investment inflow into the oil and gas industry in the third quarter 2018 was the lowest recorded since the first quarter of 2016.
Specifically, in the first, second, third and fourth quarters of 2016, $20.83 million, $200.39 million, $171.63 million and $327.30 million foreign capital flowed into the oil and gas industry respectively, while $101.08 million, $190.39 million, $16.07 million and $23.83 million flowed into the industry in the first, second, third and fourth quarters of 2017 respectively.
In 2018, the first quarter foreign capital inflow was the highest with $85.62 million, dropping by 70.98 to $24.85 million the second quarter of 2018; while it dropped further by 68.9 per cent to $7.73 million in the third quarter of 2018.
Making reference to data by National Bureau of Statistics (NBS)’s Foreign Trade Statistics for third quarter 2018, the document revealed that the total value of capital importation into Nigeria in the third quarter of 2018 stood at $2.855 billion, dropping by 48.21 per cent compared to $5.5 billion recorded in the second quarter of 2018 and a 31.12 per cent decrease compared $4.14 billion recorded in the third quarter of 2017.
The report said: “The largest amount of capital importation by type was received through portfolio investment, which accounted for 60.5 per cent ($1.723 billion) of total capital importation, followed by Other Investment, which accounted for 21.07 per cent ($601.53 million) of total capital, and then Foreign Direct Investment (FDI), which accounted for 18.58 per cent ($530.63 million) of total capital imported in the third quarter.
“By sector, capital importation as shares, which is closely related to equity investment (FDI and Portfolio Investment) dominated the third quarter of 2018, reaching $1.67 billion of the total capital importation in the quarter.”
Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, had during the presentation of the petroleum industry scorecard from 2016 to 2018, noted that investments were lacking in the petroleum industry.
According to him, the Federal Government had been working on rebuilding the country’s four refineries that are owned by NNPC, adding that the Corporation had struggled to find the financiers, now financiers have finally been found, but to agree on the terms had been difficult.
He expressed optimism that between the end of 2018 and end of first quarter 2019, the commercial aspects of this financial undertaking, which is in the excess of over $2 billion, would have been completed, thereby, allowing the private sector invest in revamping the refineries.
On other measures that would drive foreign investment inflow into the Nigerian economy, Kachikwu said: “There are 30 other field works that have been approved by the DPR, which have the capacity of adding about 500,000 barrels per day production.
“If you add that, we expect that, all things been equal and if we are working as we should, by the end of 2019, we should be averaging 2.5 million barrels production, which would be the first time that would be done in the country.”