Being an Analyst Note Issued by Proshare Research on September 15^th, 2022 

Stakeholders Review Internal Dynamics of Crude Oil Theft and Illegal Refining

The Nigeria Customs Service (NCS) intercepted two tankers loaded with over 80,000 litres of dirty diesel in Ijebu-Ode, Ogun State. The agency said it verified the products with the Nigeria Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) and discovered that they were substandard with forged documents. The discovery stresses that illegal refining and distribution of poor standard fuel is a thriving business in Nigeria. Proshare analysts, in their new report on crude oil theft, have raised concerns around the internal dynamics of crude oil theft and illegal refining in remote creeks of the Niger Delta. Some analysts who are privy to activities in the Niger Delta believe a large proportion of fuels supplied by some filling stations within the region is from illegal refiners. 

Nigerians Prepare for the Return to Production of the Port Harcourt Refinery

Meanwhile, the Minister of State for Petroleum Resources, Timipre Sylva, speaking at the Federal Executive Council (FEC), has said the rehabilitation of the old refinery in Port Harcourt, with a capacity of about 60,000 barrels per day, is ongoing and will be functional by December 2022. However, based on a recent onsite assessment of the US$1.5bn rehabilitation project, Analysts doubt the feasibility of the timeline given by the minister and project the onboarding of the refinery to Q1 2023.  

Samsung Joins the fight Against Climate Change

By 2050, Samsung Electronics wants to run its whole global operation solely on renewable electricity, a challenging target that experts warn may be impeded by South Korea's meagre climate change pledges. The South Korea-based Samsung is a top producer of computer memory chips and smartphones and, by some estimates, the biggest energy consumer among hundreds of global companies that have joined the "RE100" campaign to get 100% of electricity from renewable sources like wind or solar power. By 2030, the business hopes to have net-zero carbon emissions across its consumer electronics, television, and mobile device divisions. By 2050, it hopes to have them down globally, including in the semiconductor industry. The business intends to invest 7 trillion won ($5 billion) within the decade in programs that reduce process gas emissions, manage and recycle electronic waste, conserve water, and reduce pollution in logistics and supply networks. This move is in response to the growing challenges posed by climate change. Additionally, researchers think that this sets a fantastic example for other significant firms that contribute to global warming to act more forcefully to reduce emissions and excessive mining activities, boosting the likelihood that net zero emissions will be reached by 2050.

UBA collaborates with NGX to Increase Diaspora Investment 

UBA collaborates with Nigerian Exchange Limited (NGX) on Diaspora investments in the Nigerian capital market. It was revealed at the closing Gong Ceremony to welcome the newly appointed GMD of UBA, Mr Muyiwa Akinyemi, and other management. Analysts believe this recent development will aid the decline in Foreign Portfolio Investment between Q1 and Q2 2022 from US$ 154.97m in Q1 to US$ 147.16m in Q2. Analysts expect the collaboration should improve diaspora investment in digital assets in the country and encourage the inclusion of the new generation. 

United Nations’ Proposal to Russia a Step in the Right Direction Say Observers

The United Nations is trying to broker a deal with Russia to see Russian ammonia exported through Ukraine. In the proposal, the United Nations posited that ammonia gas owned by Russian fertilizer producer Uralchem be brought via pipeline to the Russia-Ukraine border, then purchased by U.S.-headquartered commodities trader Trammo. Ammonia is a significant ingredient in nitrate fertilizer production, and its export would help facilitate farming globally. The absence of ammonia from the market formerly shipped through Ukraine has caused significant hardship in countries dependent on that product as crop yields are expected to be reduced.

Analysts believe this deal would keep Russia at the table after Putin earlier threatened to pull out of the grain deal, saying the deal only benefitted Ukraine and the EU. This ammonia export would help stabilize fertilizer prices worldwide when several countries are experiencing extreme weather conditions.

A Surge in the Purchase of Electric Vehicles (EVs) Prick Analysts Interest

Interest in driving Electric vehicles (EV) has surged over the years despite doubts about whether it is viable for the Nigerian market, primarily due to electricity supply challenges and terrible road networks. Infrastructure challenges or not, there is a sizeable number of electric vehicle owners in Nigeria boasting of Tesla and Hyundai Kona electric models in their car lots. Nigeria's electric vehicle market is growing, but not fast enough. For Nigeria to actively partake in the global electric vehicle market, analysts insist the government needs to provide more supporting infrastructures to help grow the EV sector, infrastructures such as renovating and constructing better road networks, provision of stable electricity to help power EV charging stations, and many more. 

A Sombre Market as Negative Real Returns Cause Investor Pullbacks

For the NTB primary auction, the Debt Management Office sold N159.60 billion worth of notes; the 364-day bill was oversubscribed by +210%, while the 91-day and 182-day had less subscription of -1.4% and -79.8%, respectively. The rates reacted differently at yesterday's auction following the consistent rise at the last two auctions, the 91-day, 182-day, and 364 rates were allotted at 5.50%, 6.00%, and 9.75% respectively. Compared to the previous auction, the rate on the 91-day remained unchanged; the 182-day rose by 15bps while the 364-day fell by 25bps. The bid-to-cover across the three maturities were 0.99x, 0.20x, and 3.10x accordingly. Proshare analysts expect the quiet sentiment in the market to persist as the negative real return on most assets weighs on investors' interest (see table 1 below).   

Table 1: Nigerian Treasury Bills Auction Result

Bitcoin Retests the 20,000 Level as altcoins Soars

After a little bullish reversal on Tuesday, the global cryptocurrency market underwent bearishness in the throes of the federal reserve's meeting. It failed to reclaim the US$1trn mark, sliding by -0.39% over the past 24hr. Bitcoin performance likewise indicated a negative trend, with the coin trending slowly to US$19,793.40 before recovering to US$20,000.95. In comparison, the weekly data reveals that Bitcoin gained +5.26% from its support level of US$18,738.28 on September 7. Contrarily, major altcoins traded sideways, with Ethereum and Solana increasing by +0.77% and +3.45%, respectively. Analysts suggested that bears have become more active, as many of them have placed a sell-bet to take profit at the US$20,100 level, should Bitcoin continue to fall below the US$20,000 level (See chart 3 below).

Chart 1: Bitcoin Major Indicators