Downstream Oil & Gas Industry in H2-2020: Out of the woods?

Must Read

List of United Bank for Africa (UBA) Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number that usually identifies both the bank and the branch where an account is held. The sort...

How To Block Your Bank Account And SIM Card In Case Of Emergency

Losing your phone and wallet or having them stolen can be very frustrating. However, in case that happens to...

List of Access Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -

The outbreak of COVID-19 and the lockdown measures implemented since March-2020 have had a twin impact on the Nigerian downstream oil and gas industry. On one hand, the Nigerian government leveraged the significant decline in global crude oil prices to somewhat remove the controversial fuel subsidy regime, as the NNPC reported over-recovery.

Accordingly, the Petroleum Product Pricing Regulatory Agency (PPPRA) implemented a monthly market-based pricing regime, to provide prices reflective of market reality for Oil Marketing Companies (OMCs). However, this was met with huge difficulty, as monthly prices were reduced (from a high of N145/litre pre-market regime to N121.5/litre for Jun2020 sales), with OMCs still carrying inventory bought at higher prices.

Downstream Oil & Gas Industry in H2-2020: Out of the woods?
Sources NSE, United Capital Research

On the other hand, the restrictions in movement across the country, significantly dragged the Revenue and Profitability of most of the industry players, with only ARDOVA (formerly Forte Oil) recording a mild increase in Revenue during the review period.

Looking ahead, we have a pessimistic outlook on the downstream oil and gas industry in H2-2020. This is as we expect margins of major industry players under our coverage to remain constrained over the period. Hence, profitability will come under severe pressure as observed as H1-2020.

Read Also:  Roadshow for Equatorial Guinea Oil & Gas and Mining Licensing to be hosted by African Energy Chamber in china
- Advertisement -

Also, the possibility of the FG backtracking the market-based price regime once crude oil prices start tracking higher (above $50.0/b) remains the biggest downside risk for players with high inventory exposures.

- Advertisement -
Downstream Oil & Gas Industry in H2-2020: Out of the woods? - Brand SpurDownstream Oil & Gas Industry in H2-2020: Out of the woods? - Brand Spur
- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Downstream Oil & Gas Industry in H2-2020: Out of the woods? - Brand SpurDownstream Oil & Gas Industry in H2-2020: Out of the woods? - Brand Spur

Latest News

DLM Group Celebrates IWD With Abike Dabiri And Juliet Ehimuan

DLM Group continues its commitment to celebrate and enable Women leaders on International Women’s Day 2021. In commemoration of...
- Advertisement -
BrandsPur Weekly Cartoons
- Advertisement -Downstream Oil & Gas Industry in H2-2020: Out of the woods? - Brand SpurDownstream Oil & Gas Industry in H2-2020: Out of the woods? - Brand Spur