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Nigeria’s Kaduna refinery restarts

21 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

CAIRO (Reuters) – Nigeria has restarted its northern Kaduna refinery, an official at state oil firm NNPC said on Monday after a pipeline pumping crude to the plant resumed operations.

The refinery, which has a capacity of 110,000 barrels a day, resumed on Saturday, said Ohi Alegbe, a spokesman for NNPC. He gave no production data.

Nigeria’s four ageing oil refineries produced nothing in October, despite a goal from the state company to produce 30 percent of its own gasoline in 2016.

Despite exporting 2 million barrels per day (bpd) of crude oil, Nigeria is almost wholly reliant on imported gasoline, kerosene and other petroleum products.

 

(Reporting by Ulf Laessing; Editing by David Goodman)

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Brent crude oil falls to 2004 low as market rout heads into Christmas

21 December 2015 Comments (0) Business, Latest Updates from Reuters

SINGAPORE (Reuters) – Brent crude prices fell to levels last seen in 2004 on Monday, dropping below the lows hit during the 2008 financial crisis on renewed worries over an oil glut.

Global production remains at or near record highs and new supply looms from the Iran and the United States. Crude markets are also under pressure following last week’s U.S. interest rate hikes and on signs of growing U.S. stockpiles even as more drilling rigs are deployed.

Brent futures fell almost 2 percent and as low as $36.17 per barrel on Monday, the weakest since 2004 and below the $36.20 low reached on Christmas Eve 2008 before edging back to $36.42 at 0620 GMT. Prices are still down 46 cents from their last settlement.

U.S. West Texas Intermediate (WTI) futures were down 24 cents at $34.49 per barrel and close to last Friday’s 2015 lows.

Both benchmarks have fallen more than two-thirds since mid-2014 when the rout began.

An unexpected gain in the U.S. oil rig count – by 17 to 541 – and the strength in the U.S. dollar following last week’s interest rate hike, which makes oil more expensive for countries using different currencies, all weighed on crude prices, said analysts.

“The increase in rig count even in a low crude oil price environment suggests shale producers are committed to maintaining production levels. The resilient production data reflect rising U.S. crude stockpiles, which have surged to 491 million barrels, the most for this time of year since 1930,” ANZ bank said.

The U.S. glut adds to global oversupply as the main producers, including Russia and the Organization of the Petroleum Exporting Countries (OPEC), pump hundreds of thousands of barrels of crude every day in excess of demand.

Russian production has surpassed 10 million barrels per day (bpd), the highest since the collapse of the Soviet Union, while OPEC output also remains near record levels above 31.5 million bpd. OPEC leader Saudi Arabia upped production from 10.226 to 10.276 million bpd between September and October.

Iraq’s oil minister Adel Abdul Mahdi told Reuters over the weekend that OPEC would stick to its Dec. 4 decision to not limit production despite the drop in prices.

“OPEC can’t take a unilateral decision, for example, to cut production and others … raise production,” he said.

More oil becoming available soon will add to the glut, with Iran hoping to ramp up sales in early 2016 once sanctions against Tehran are lifted.

Iran will export most of its enriched uranium to Russia in coming days as it rushes to implement a nuclear deal and secure relief from international sanctions, Tehran’s nuclear chief was quoted as saying over the weekend.

This comes only days after the U.S. voted to lift a 40-year-old ban on crude exports which could see some production released on the global market.

 

(By Henning Gloystein. Editing by Christian Schmollinger)

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Nigeria Sterling Bank says open to merger to build scale

20 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

LAGOS (Reuters) – Nigeria’s Sterling Bank is open to merger or acquisition talks to build scale to counter weak market conditions caused by slow economic growth this year which could continue into 2016, its chief executive said.

Africa’s biggest economy relies on oil exports for about 58 percent of government revenue and faces its worst economic crisis in years because of the fall in crude prices, which tumbled to their lowest in more than six years last week.

CEO Yemi Adeola said late on Thursday the slowdown in the economy couple with currency weakness provided opportunities for a market consolidation to build scale and cut costs, adding that one or two foreign banks were having discussions about possible acquisitions in Nigeria.

“You could see … one or two international banks taking over one or two Nigerian banks … in 2016 from the look of things,” he said, declining to name the lenders.

“As for us at Sterling, we are always open, anything that will give us scale, we will pursue.”

Sterling Bank, which itself is the product of a merger of six local banks, was the target of a takeover in 2011 by South Africa’s No.2 banking group FirstRand. Acquisition talks collapsed after the two sides failed to agree on terms.

Shares in the bank, which have fallen 25.9 percent this year, are trading at less than 1 times its book value, analysts say. The stock shed 4.79 percent on Friday to 1.79 naira, giving it a market value of 51.5 billion naira ($259 million).

Adeola expects investment flows to reverse after the U.S. Federal Reserve raised interest rates this week for the first time in almost a decade, a move that could also hurt borrowers exposed to the dollar.

The naira, which is pegged to the dollar, has been hitting new lows among retail bureaux de change operators since last week with the central bank trying to curb demand to conserve its reserves, hurting commercial banks’ trade business.

Sterling Bank said on Thursday it would raise 35 billion naira ($177 million) in Tier II debt early next year to expand its loan book and saw no need to tap equity markets.

 

(By Oludare Mayowa. Writing by Chijioke Ohuocha; Editing by Mark Potter)

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Ivory Coast produced 126,000 tonnes of robusta in 2014/15

18 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

ABIDJAN (Reuters) – Ivory Coast produced 126,000 tonnes of robusta coffee during the recently ended 2014/15 season and is targeting output of 130,000 tonnes this season as it seeks to revive the sector after years of decline, a government spokesman said on Friday.

Under reforms introduced in 2012, the West African country abandoned more than a decade of liberalisation in its coffee industry, which proved bad for farmers and production.

Now the Coffee and Cocoa Council (CCC) sells forward the bulk of the anticipated crop in order to fix a guaranteed price for farmers.

“Since the reform, coffee production hasn’t ceased to increase,” Bruno Kone said following a cabinet meeting in the commercial capital Abidjan.

Ivory Coast, the world’s biggest cocoa grower, set a government guaranteed farmer price of 670 CFA francs ($1.11) per kilogram on Friday’s opening day of the 2015/16 harvest, Bruno Kone said, up from 650 CFA francs/kg last season.

Ivorian green robusta coffee output peaked at 380,000 tonnes in 2000, statistics from the United Nations’ Food and Agriculture Organization show, before collapsing during a decade of political turmoil and a drop in world prices.

Before the reform programme was implemented, Kone said, annual output had fallen to around 90,000 tonnes. Ivory Coast is targeting production of around 400,000 tonnes by 2020.

 

(Reporting by Loucoumane Coulibaly; Writing by Joe Bavier. Editing by Jane Merriman)

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Moody’s downgrades Glencore’s ratings, keeps stable outlook

18 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

(Reuters) – Commodities trader Glencore’s credit rating was downgraded to one notch above junk status by Moody’s Investors Service on Friday which cited likely weak mining market conditions over the next two years.

Moody’s downgraded Glencore’s ratings by one notch to Baa3 from Baa2 and said the outlook was stable.

“Our decision … reflects our expectations that the pricing environment in mining will remain unfavourable in 2016-17, making a return to the previous level of earnings unlikely,” Moody’s lead analyst on Glencore Elena Nadtotchi said in a statement.

“However, we believe that Glencore has the capacity to adjust its balance sheet to a reduced earnings level in order to maintain its investment grade ratings.”

Glencore said last week it remained focused on preserving its investment grade ratings.

Glencore has a higher debt load than its mining company rivals in part because its trading business borrows money to take large positions that can generate tight profit margins.

Moody’s said last month it was reviewing its rating of commodity trader Noble Group for a potential downgrade, citing the company’s weaker than expected liquidity profile and its high leverage. Noble’s current Moody’s rating is Baa3.

Switzerland-based Glencore came under pressure this year from investors and ratings agencies to cut its net debt of around $30 billion, one of the highest in the industry, as prices for commodities such as copper and coal hit multi-year lows.

In September, Glencore said it would take action to cut net debt, including asset sales, reduced expenditure, a suspension of dividend payments and raising $2.5 billion of new equity capital to protect its investment grade ratings after its shares fell to record lows.

It said last week it was targeting net debt of $18 billion to $19 billion by the end of 2016, lowering a previous target of $20 billion, after commodity prices tumbled further.

Glencore had previously said the plan would allow it to withstand copper prices of $4,000 a tonne, and the revised debt target was expected to help the company cope with copper below that level, even at $3,500 a tonne.

Copper hit a six-year low of $4,443.50 a tonne on Nov. 23, but has since recovered and was trading at $4,658 a tonne as of 1410 GMT on Friday.

“The stable outlook on the Baa3 ratings factors the expectation that Glencore will improve its leverage profile in 2016 and will continue to maintain strong liquidity,” Moody’s said.

The ratings agency also said an upgrade of Glencore’s ratings to Baa2 would be considered in the medium term once leverage was sustainably reduced.

Glencore makes about a quarter of its earnings from commodities trading, which had previously allowed it to withstand a steep fall in oil and metal prices slightly better than pure-play miners.

But the division came under the spotlight after it generated lower-than-expected earnings in the first half and the company cut its earnings forecast for the business.

Glencore has set guidance of $2.4 billion to $2.7 billion for the division’s earnings in 2016 and Moody’s said earnings below this target could place negative pressure on the Baa3 ratings.

 

(Reporting by Olivia Kumwenda-Mtambo; editing by Jason Neely and Jane Merriman)

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South Africa white maize at record high, drought concerns mount

18 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Mounting jitters about a searing drought pushed South African white maize prices to record highs on Friday and traders said the ceiling had not been reached as farmers fail to plant in the Free State province.

The rand’s plunge to record lows has also spurred the rally, which has serious implications for the inflation outlook in Africa’s most advanced economy as white maize is the main source of calories for lower-income households.

South Africa’s central bank, which is in a tightening cycle, has repeatedly voiced concern about the drought and food prices.

The December white maize contract, which expires next week, was 0.6 percent higher at 4,140 rand a tonne after scaling a peak of 4,160 rand, according to Thomson Reuters data.

“Some relief rain fell yesterday and last night but it is still too little in the Free State and there are still farmers there who have not planted yet,” said Piet Faure, a trader at CJS Securities.

The weather forecast for the next two weeks in maize-growing areas of the Free State is also not good, traders said. Farmers who have not yet planted will soon run out of time to do so.

An El Nino weather pattern has exacerbated the drought and follows a bad last harvest when dry conditions shriveled the crop by a third to 9.94 million tonnes, the lowest since 2007.

 

(Reporting by Ed Stoddard; Editing by Ed Cropley)

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Nigeria says its oil refineries produce nothing

17 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

ABUJA (Reuters) – Nigeria, aiming to boost its crude output, is still grappling with decrepit refineries that fail to produce fuel, which it has to import, the head of state oil firm the Nigerian National Petroleum Corporation (NNPC) said on Thursday.

Oil production is forecast to reach 2.1 million barrels of oil per day (bpd) this year and should rise to 2.4 million bpd next year, Emmanuel Ibe Kachikwu told reporters, though none was being refined domestically.

“In October we had zero performance (from refineries), we didn’t produce anything,” Kachikwu said. “As of now the refineries are still not working. We are going to try and repair them.”

In an apparent attempt to lower fuel subsidy costs amid sharply lower oil revenues, Kachikwu said refined products would be sold in a band between 87 and 97 naira per litre that is adjusted based on crude prices. Prices are currently set at 97 naira per litre regardless of market prices.

“So it’s no longer subsidy as in the air, it’s not a static number,” he said. “Probably once in quarter we say what is the price of crude, how can we reflect (it) in the price of the product to make sure we don’t pass the ceiling of 97 (naira).”

In November, the country’s top refinery official told Reuters that Nigeria aimed to produce up to 30 percent of its domestic gasoline needs by the first quarter of 2016 following an overhaul of the refineries.

Kachikwu reiterated Africa’s top oil producer was trying to secure external funding to revamp the refineries before considering their sale. “We cannot sell the refineries in their present state. They will be worth nothing.”

President Muhammadu Buhari, also oil minister, has made refurbishing the country’s dilapidated refining system a priority as he seeks to reform an industry hampered by mismanagement and corruption.

 

(By Camillus Eboh. Reporting by Camillus Eboh; Writing by Ulf Laessing; Editing by David Holmes and William Hardy)

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Mali produces 2.45 mil tons of rice

17 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

BAMAKO (Reuters) – Mali has produced 2,451,321 tonnes of rice as it approaches the end of the 2015/16 harvest, up 13 percent from last season but short of an initial forecast, government statistics showed on Thursday.

The landlocked country, the second-largest rice producer in Africa behind Nigeria, will largely finish harvesting this month and continue marketing its production next year.

The remaining harvesting is unlikely to add significantly to the season’s total output.

“The increase this year is generally explained by good rain, an increase in planted land, new strains like ‘Nerica’, the use of more fertiliser especially with the help of subsidies,” said Balla Keia, head the rural development ministry’s statistics division.

Last season, the West African country produced 2,166,830 tonnes of paddy rice and had projected a record 2,599,450 tonne rice crop, with a surplus of 285,000 tonnes above expected domestic consumption.

 

(Reporting by Tiemoko Diallo; writing by Makini Brice; editing by Joe Bavier and Jason Neely)

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South Africa’s rand eases after U.S rate hike, stocks rise

17 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s currency weakened on Thursday after the United States central bank raised its key lending rate, while Moody’s decision to change its outlook on Pretoria’s credit rating to negative also pressured local assets.

By 0700 GMT the rand had weakened 0.27 percent to 14.9750 per dollar, giving up some of the gains of the previous two sessions sparked by the naming of Pravin Gordhan as finance minister.

Government bonds firmed, with the yield on the benchmark paper due in 2026 shedding 12 basis points to 9.4 percent.

On the equities market, the benchmark Top-40 index opened up 1.3 percent at 44,305 points.

While markets had anticipated the 25 basis points rate hike by the U.S. Federal Reserve, emerging market assets still suffered, put under pressure by the hawkish tone of Fed Chair Janet Yellen’s speech.

“After knee-jerk weakness the dollar has gained significantly,” Rand Merchant Bank currency analyst John Cairns said in a note. “We suspect this will pressure USD/ZAR to the upside through the course of the day.”

Yellen said further monetary tightening would be gradual and data-dependent, while pointing out an improved economy and labour market, raising the likelihood of more hikes in 2016.

Moody’s cut its outlook on South Africa to “negative” from “stable” late on Tuesday, citing structural challenges in the mining industry and increasing political pressures on the budget.

In local data, South Africa’s statistics agency publishes producer price inflation data for November at 0930 GMT.

 

(Reporting by Mfuneko Toyana; Editing by Ed Cropley)

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Sinochem signs 10-year deal to buy oil from Angola’s Sonangol

16 December 2015 Comments (0) Africa, Business, Latest Updates from Reuters

BEIJING/LONDON (Reuters) – China’s state-run Sinochem Group said on Wednesday it had signed a deal with Angolan state-owned producer Sonangol to buy crude oil for more than 10 years.

The statement on the Chinese company’s website did not give details of the supply amount or other financial details, but trading sources said the agreement was for four or five cargoes per month, which would make the company one of the largest holders of monthly contracts to buy Angolan crude.

There are currently around 15 cargoes given to these so-called term buyers each month from Angola’s export programmes of roughly 55 cargoes.

The deal is a coup for Angola, as OPEC members fight for market share, particularly in China, the world’s largest energy consumer.

While payment terms were not disclosed, sources said the deal directly related to loans that the Chinese government has given to Angola as its commodity-reliant economy struggles with the more than 60 percent drop in crude oil prices over the past year.

Along with the chairman of Sonangol, Angola’s financial minister, Armando Manuel, was present at the signing of the deal, as was Zheng Zhijie, president of China Development Bank.

A year ago, China agreed to lend Sonangol $2 billion to expand oil and gas projects, and Angolan President Jose Eduardo dos Santos was in China in June seeking a two-year moratorium on debt repayments along with financing for a variety of projects, including a $4.5 billion hydropower scheme.

But the deal is also likely to push out another term contract holder, sources said. Sonangol has to trade some of its oil on a spot basis in order to establish prices for term agreements.

 

(By Chen Aizhu and Libby George. Editing by Christian Schmollinger and David Holmes)

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