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Falling oil prices weigh on Nigerian economy, G20 Summit in focus

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Lukman Otunuga, Research Analyst at FXTM, comments on the falling oil prices and the impact on Nigerian economy.

The recent depreciation in oil prices presents significant risks to oil export-dependent nations, with Nigeria falling into the category.

Depressed oil prices will not only shave government revenues but also the nation’s ability to implement its 2019 budget which pegged oil prices at $60 per barrel.

If the Central Bank of Nigeria finds itself in a difficult position to defend the Naira amid falling external reserves, inflationary pressures are likely to make a return as the Naira weakens.

The near-term outlook for the economy paints a gloomy picture amid weak oil prices, rising inflationary pressures and possible depreciation of the Naira.

However, with GDP potentially bolstered by increased government spending ahead of the presidential elections next year and diversification in play, there is still some light at the end of the tunnel.

Market sentiment hangs on G20 Summit

Conflicting signals over the direction of trade between the world’s two largest economies are poised to place investors on an emotional rollercoaster ride ahead of this weekend’s G20 meeting.

It was only on Monday US President Donald Trump stated that he was “highly unlikely” to suspend planned increases to existing tariffs on Chinese goods. One day later, White House economic adviser Larry Kudlow expressed optimism that a trade deal between the United States and China was still a possibility. With Trump’s remarks clashing head-on with Kudlow’s positive comments, the US administration is clearly adopting a classical good cop, bad cop strategy leading up to trade talks. Will this method work with China? This is the question on the mind of many market players.

In a perfect world, the best-case scenario for financial markets will be for both sides to find a middle ground on trade and secure a breakthrough deal.

However, this outcome is highly unlikely with investors closely observing for any display of co-operation or interest in further negotiations to ease trade tensions.

The worst-case scenario for markets will be if talks descend into disagreements on trade which may fuel fears over a trade war between the United States and China becoming reality.

Dollar remains the king of the hill

Dollar strength is set to remain a dominant market theme this week thanks to renewed trade tensions and expectation of higher US interest rates.

Buying sentiment towards the Dollar brightened yesterday following hawkish remarks from Fed Vice Chair Richard Clarida while uncertainty over trade fueled upside gains.

Investors will be keeping a close eye on the pending second estimate of third-quarter GDP growth figures to gauge the health of the US economy.

There will be a special focus on Fed Chair Jerome Powell’s speech, which will most likely be closely scrutinized for clues on how many more times the Fed plans to raise rates in 2019. If Powell strikes a hawkish note, the Dollar Index has the potential to rally towards 98.00.

Another painful day for the British Pound?

The story defining the British Pound’s painful depreciation continues to revolve around Brexit-related uncertainty and political drama in Westminster.

Matters could be worsened for the Pound if today’s UK Treasury’s Brexit forecast paints a very gloomy outlook for the UK economy post Brexit. Some parts of the Treasury report have already been leaked by the Telegraph this morning with the UK seen to be £150bn worse off under a no-deal. With GDP also projected to be 7.6% lower under a no-deal scenario over a 15-year period, things could get very messy to the run-up of the official Brexit deadline.

In regards to the technical picture, the GBPUSD is firmly bearish on the daily charts with bears eyeing the 1.2700 level.

Commodity spotlight – Gold

Gold was treated without mercy by an aggressively appreciating Dollar yesterday with prices sliding towards the $1,212 level.

The heavily bearish price action witnessed on the yellow metal confirms how its trajectory remains heavily influenced by the Dollar’s performance and US rate hike expectations.

With the Dollar likely to remain supported by safe-haven flows and expectations of a rate hike in December, Gold is likely to witness further downside. Sustained weakness below $1,214 could inspire a move back towards the psychological $1,200 level.

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Energy

AVEVA Appoints Joanna Mainguy as New Sustainability Accelerator Director

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Joanna AVEVA
Joanna Mainguy, Sustainability Accelerator Director at AVEVA
  • Joanna Mainguy will steer strategies for sustainability innovation across AVEVA’s portfolio and partner ecosystem, furthering ESG targets for 2025 and beyond

AVEVA, a global leader in industrial software, driving digital transformation and sustainability, today announced the appointment of Joanna Mainguy as Sustainability Accelerator Director.

Joanna’s appointment testifies to AVEVA’s dedication to strengthening the company’s sustainability impact in line with advancing global climate commitments. 

As Sustainability Accelerator Director, Joanna Mainguy will focus exclusively on sustainability solutions and strategies to accelerate innovation that will help AVEVA’s customers to achieve their net-zero targets.

She will look at how AVEVA leverages current market and customer analysis to inform its in-house development team, advise on new customer collaborations and on how AVEVA should grow its partnership network and M&A pipeline to reflect its sustainability priorities.

Joanna will lead the implementation of a sustainability solutions plan tailored to meet the most pressing needs of AVEVA’s industrial customers on low-carbon transition, circularity and resilience, via an integrated product, marketing and sales approach. She will work closely with AVEVA’s portfolio, business area and R&D leads to continue to develop new sustainability capabilities and drive collaboration on go-to-market initiatives that support industry with contributing to an accelerated energy transition and shift to a circular economy.

Joanna was formerly Industry Director, EMEA, for Energy & Sustainability at Microsoft, where she led strategic engagements with major energy providers and supported the energy transition with digital solutions. She has worked across the entire energy value chain and has more than 15 years of experience in process industries and the energy sector, including work for major system integrators, software and energy companies.

Lisa Wee, Global Head of Sustainability, AVEVA, said: “We are excited to welcome Joanna to AVEVA. She will bolster our mission to enable faster uptake of existing sustainability solutions across the industrial landscape, while in parallel we continue to invest in product capabilities and partnerships that will push out the frontiers of sustainability innovation for industry. At AVEVA we look to lead by example on sustainability and we achieved a 93% reduction in Scope 1 and 2 emissions last year. We aspire to help our customers better leverage digital solutions to realize their own ambitious sustainability targets early, and Joanna brings a wealth of experience to help support this.”

Commenting on her appointment, Joanna Mainguy, Sustainability Accelerator Director, AVEVA, said: “I am delighted to join AVEVA at such a pivotal time in its sustainability innovation and growth trajectory. I look forward to working with AVEVA teams and customers to continue to grow the sustainability benefits that can be achieved with AVEVA software. I am also keen to work closely with our partners to drive further positive change at scale, since we know addressing the climate crisis will continue to require expanded collaboration”.

AVEVA actively embeds sustainability into its core product strategy with specific capabilities in its software portfolio.

AVEVA’s software enables organizations to connect and contextualize key sustainability data with artificial intelligence and human insight, enhancing their agility, resilience and sustainability in order to help drive responsible use of the world’s resources.

AVEVA’s 2023 Sustainability Progress Report reveals significant progress across all three pillars of the company’s sustainability framework, encompassing product strategy, operations and culture. 

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Energy

Climate Change: NNPC Ltd/Total Energies JV Achieves Zero Gas Flare

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In pursuit of meeting the targets of 20% (unconditional) and 47% (conditional) greenhouse gas emission reduction as contained in the Nationally Determined Contribution under the Paris Accord signed by the President Bola Ahmed Tinubu administration, the NNPC Ltd/TotalEnergies Joint Venture has achieved zero routine gas flare in all its assets.

According to a statement signed by Olufemi Soneye, Chief Corporate Communications Officer, NNPC Ltd., this feat was announced on Thursday during an inspection tour of OML 100 in South-eastern Niger Delta, off Port Harcourt, by a joint NNPC Ltd and TotalEnergies Team to ascertain the success of the OML Flare Reduction Project launched in December 2023.  

The NNPC Ltd/TotalEnergies Joint Venture, which is the concession holder of four leases, had hitherto achieved zero routine flaring across OML 99 (2006), OML 102 (2014), and OML 58 (2016), leaving OML 100 as the only lease with routine flaring going on.

The significance of this achievement is that the last routine flare volume of about 12MMscf/d (twelve million standard cubic feet per day) of gas has now been eliminated giving rise to a greenhouse gas emissions reduction of about 341KtCO₂e/yr.

The achievement is an outcome of a programme introduced by the NNPC Ltd to galvanize action towards achieving the zero routine flare by 2030 across its portfolio of assets.

It is also a testament to NNPC Ltd’s prioritization of sustainability anchored on the ‘first R’ of its 5R Strategy (Reduce, Replace, Renew, Re-plant, Repurpose), as it strives to reduce its carbon footprint.

Work is ongoing across all other assets within NNPC Ltd’s Upstream Directorate to ensure that all assets achieve zero routine flaring by 2030 or earlier.

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Energy

NNPC Celebrates 14,000bpd Production from Akpo West Field

By SANDRA ANI

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In line with President Bola Ahmed Tinubu’s directive to the Nigerian National Petroleum Company Limited (NNPC Ltd) to optimise production from the nation’s oil and gas assets, the Company has announced the successful commencement of oil production from the Akpo West Field.

The milestone, which is the result of meticulous planning, strategic collaboration, and unwavering dedication from all stakeholders involved in the project, will add 14,000 barrels per day condensate to the nation’s production. This will be followed up by the production of about 4million cubic meters of gas per day by 2028.

The development of Akpo West which is on Petroleum Mining Lease (PML) 2 (formerly OML 130) leverages the existing Akpo Floating Production Storage and Offloading (FPSO) facility via a subsea tie-back to keep costs low and minimize greenhouse gas emissions.

The milestone was enabled by the strategic leadership of the Group Chief Executive Officer (GCEO), Mr. Mele Kyari, and the Upstream Directorate of the NNPC Ltd whose support played no small role in propelling the operators to actualise the short- and mid-term hydrocarbon production goal of the President Tinubu administration.

Located 135 kilometres offshore, Akpo West is one of the discoveries on PML 2 with proximity to the Akpo main which started up in 2009 and produced 124,000 barrels of oil equivalent per day in 2023.

PML 2 is operated by TotalEnergies with a 24% interest, in partnership with CNOOC (45%), Sapetro (15%), Prime 130 (16%), and the Nigerian National Petroleum Company Ltd as the concessionaire of the Production Sharing Contract (PSC).

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