A bank in Europe, BBVA, has made a $350 million revolving credit facility to Singapore-based Olam International structured in a way that the interest rate on the credit will decline as the borrower improves on its digital-nativity and -readiness, across 32 digital business milestones the bank has established. BBVA is offering this product based on its understanding that the more digital a company evolves, the better it performs on key metrics like staff engagement, customer acquisition and reduced attrition. In other words, the company does better in the business as it becomes more digitally driven in its operations. Simply, it moves to the edges for higher values.

“What we are increasingly seeing is that the more digitally advanced a business is, the better it performs, both financially, but also in terms of key metrics like staff engagement, customer acquisition and reduced attrition,” said Ricardo Laiseca, BBVA’s head of global finance.

“We see the development of these digital loan facilities as a way to tangibly support and encourage other businesses to evolve as we have done,” Mr Laiseca said. BBVA has long professed the goal of becoming not just a digital bank but a “digital company”.

But going digital is not cheap: U.S. banking giant, JP Morgan Chase, spends about $600 million yearly on cybersecurity and employs 3,000 dedicated people just for cybersecurity. So, that digital transition for any company is a real commitment to a future.

Release that Precious Gem in You

By Nnamdi Odumody

About 13 percent of Nigeria’s total population is unemployed and in the next ten years, Nigeria’s working age is projected to reach 122 million people. Currently, there are not enough jobs for millions of graduates who pass through the tertiary institutions.

According to a research carried out by Dr Solomon Adeleye and other oil and gas consultants, about 2 million jobs can be created in the oil and gas industry, through Co-Location, which is a practice that promotes optimization through one or more plants sharing mature pre-existing infrastructure rather than building their own or waiting for third party to do so. Dr Adeleye said that if colocation is encouraged in the hydrocarbon sector, Nigeria stands to maintain a minimum of 3 percent GDP growth in the next decade.

Co-location concept is defined as a practice, which promotes optimisation through one or more plants sharing mature pre-existing infrastructure rather than building their own or waiting for a third party to do so.

Speaking at a lecture organized for journalists, on the benefits of colocation, in the nation’s existing hydrocarbon facilities in the country, in Lagos, On Wednesday, consultants in the oil and gas sector, Mr. Charles Majomi, Dr. Solomon Adeleye and Dr. Brown Ogbeifun noted that if the Federal Government allows colocation in the key refineries and hydrocarbon facilities in the country, over two million jobs will be created in the next decade, warning however that a continuous neglect of the sector spelt doom for the country.

The Kaduna, Port Harcourt and Warri refineries can play host to fertilizer plants which will generate over 1000 jobs. Warri Refinery can create 200,000 jobs by hosting at least 20 plants which will make use of its dormant assets. The Ikot Abasi Aluminium and Fertilizer Plant at Akwa Ibom, can create 60,000 jobs, if the policy of co-location is adopted, while the Kaduna Refinery can create 10,000 jobs from the policy.

The Nigeria Liquefied Natural Gas company can change fuel source from ethane, utilize the extracted ethane, and as a result generate $2 billion per year, creating 200,000 jobs, and supporting 20 petrochemical plants. Some of these plants which make hair sprays, and pipes to support new sectors in the economy.

The Department of Petroleum Resources should encourage co-location as a strategy, to attract investors into the downstream sector of the oil and gas industry, as it will facilitate asset de-risking through efficiency in the utilization of the factors of production, as the existing assets will remove the barriers to entry that make new plants risky. This will lead to quicker time frame for establishing petrochemicals, plastics and fertilizer plants in the nation, leading to millions of jobs being created in less than a decade. This will be done without any direct financial commitment from the Federal Government.

By Nnamdi Odumody

With international benchmark of Brent Crude averaging $71.19 per barrel in 2018, 31.5 percent gain from 2017 when it averaged $54.15 per barrel, the state-owned Nigerian National Petroleum Corporation (NNPC) performed poorly when compared with its global peers.

According to its full year report for 2018, between January and December 2018 it spent 730.9 billion naira on under-recovery (subsidy) while 140.6 billion naira was spent on pipeline repairs and management cost. Its operations and financial report for 2018 showed gains of 393.5 billion naira from its upstream and gas processing subsidiaries: Nigerian Petroleum Development Company, Integrated Data Service, National Engineering and Technical Company, Nigerian Gas Company Limited and Nigerian Gas Marketing Company were wiped off largely by its downstream subsidiary operations which recorded losses of about 351 billion naira.

In 2018, NNPC recorded 24.9 billion naira on product losses while cash call payment for the development of oil and gas assets consumed Federal Government’s revenue as 1.829 trillion naira was paid to oil companies from revenue of 3.11 trillion naira, generated from sale of crude oil and gas in 2018. The combined value output by the nation’s three refineries at Warri, Port Harcourt and Kaduna at import parity price for the month of December 2018 was 10.86 billion naira while the associated crude plus freight costs and operational expenses were 8.89 billion naira and 19.29 billion naira resulting in an operating deficit of 17.32 billion naira by the refineries. The Group Operating Revenue for December 2018 was 731.88 billion naira while expenditure surged by 429.52 billion naira from the previous month.

Brazil’s state owned Petroleo De Brasiliero (Petrobras) had a net income of $6.84 billion, EBITDA(Earnings Before Taxes Depreciation and Amortization) of $30.44 billion, and for the fourth straight year a positive cash flow of $14.17 billion in 2018, generating $40.14 billion in municipal, state and federal taxes plus government take.

Sinopec (China’s state owned oil company) registered a 22 percent year over year growth to achieve $426 billion as operating revenue in 2018 with its downstream business accounting for about 60 percent of its revenue which increased by 2.31 percent to 244 million tonnes while total domestic sales volume of refined products increased by 1.4 percent to 180.24 metric tonnes.

Rosneft of Russia boosted revenue by 31.4 percent to $133.7 billion in 2018. It’s oil and liquids production increased by 2.1 percent to 4.7 million bpd while gas production averaged 1.12mboed per day.

Equinor of Norway earned $7.5 billion as profit – a 64 percent increase from its previous operating year result of $4.6 billion while total oil production hit 2,170mboe per day as at the last quarter of 2018.

Saudi Arabia’s Saudi Aramco earned the biggest profit of all the oil companies. Its net income was $111billion and it generated $224 billion as EBITDA. Currently it wants to raise funds from the global capital markets by offering a percentage of its shares which will value it as the world’s first trillion dollar oil corporation.

The failure of the President who is also Nigeria’s Minister Of Petroleum Resources to sign into law The Petroleum Industry Governance Bill aimed at making Nigeria’s oil and gas industry globally competitive like that of other oil producing countries, and reforming NNPC to operate as a successful business entity, is making the Nigerian state-owned corporation underperform below its potentials.