The global oil price rout has taken a toll on indigenous oil producing firms in Nigeria as they have now penciled down over 3,000 staff for sack. New Telegraph gathered exclusively at the weekend that the companies that are struggling to break even now face tough time due to the collapse in oil price.

One of the indigenous firms, Shoreline Group, an industry source told this newspaper, has concluded plans to sack about 700 of its staff in its attempt to reduce overhead and be able to survive the “tough” condition.

“You are likely to see fresh talks on merger among the indigenous companies that are not ready to die. While some of them are under the threat of folding up if this very low oil price regime continues, many of them are already considering merger,” he said. Shoreline has about 2,000 staff on its payroll and chief executive officer of the company, Kola Karim, confirmed the plans to sack 35 per cent of its staff, maintaining that his company had also halted plans to issue $500 million of Eurobonds.

In the middle of last year, Shoreline’s executives went on a two-week roadshow in the US and Middle East to discuss a debut issue of five-to seven-year debt to buy oil and gas assets across Africa. Now with Brent crude trading below $30 a barrel and Nigeria’s central bank imposing restrictions on the amount of dollars that businesses can obtain, Shoreline plans to cut 35 per cent of its nearly 2,000 staff to survive the “tough” conditions, Karim, 47, said in a January 19 interview in his office in Lagos.

“We went on a roadshow and the world of oil collapsed,” he said. “We’re going to wait until end of first quarter and see how stable markets are. Midlast year, our projections were $60-dollar oil for the next five years,” he said. Founded in 1997, Shoreline is one of several local businesses that bought fields in the oil-rich Niger River delta region after foreign companies, including Royal Dutch Shell Plc, Total SA and Eni SpA, sold onshore assets. With oil’s plunge, Karim said Shoreline is reducing production to 17,000 barrels per day for the rest of the year from 52,000 barrels per day.

Shoreline has seen its other businesses that range from construction to rope making come under pressure from foreignexchange restrictions. Efforts by the central bank to stem the fall of the local currency have led to trading curbs, causing a shortage of dollars in a country that imports almost all manufactured goods, hurting businesses and sending the unofficial naira market rate soaring to a record 305 per dollar.

Karim said he is switching Shoreline’s focus instead to gas production and distribution within Lagos, as it costs the company over $20 to produce a barrel of oil. Brent crude, which compares with Nigerian oil grades, traded at $27.61 per barrel as of 7:47 a.m. in London.

 

With a government-mandated price of $3.69 per standard cubic foot of gas to encourage local producers to sell to Nigerian consumers such as power plants, Shoreline is in talks with the African Finance Corp., African Development Bank and Af-rican Export-Import Bank to get them to lend $500 million to finance the projects, which include 125 kilometers (78 miles) of pipeline. “That is a local business that’s tied to dollars, but is not fluctuating,” Karim said.

“More importantly, there’s no downside to it because the country needs gas to energize its growth, so that’s a secure business.” This came as Chevron Corporation said it was considering selling its 75 per cent stake in its South African unit.

Chevron has made a decision to solicit expressions of interest for the stake, a sale that would form part of a three-year asset divestment programme announced in 2014, the San Ramon, Californiabased company said in an e-mailed statement on Thursday.

“This demonstrates Chevron’s continuing focus on balancing our global portfolio with our long-term business priorities,” Mark Nelson, Chevron’s president of international products, said in the statement. Chevron’s South African unit operates a 110,000-barrel- a-day refinery in Cape Town, a lubricant plant in the eastern port city of Durban and markets its products through over 845 Caltex filling stations, according to its website.

Source : .http://newtelegraphonline.com/indigenous-oil-firms-sack-3000/

Oh my...Sorry for them.

But more companies need to shut down for the global supply to reduce so we will have an undersupply that will drive prices up. The sooner the better... Feel bad for them though.

ladyF:
Oh my...Sorry for them.

But more companies need to shut down for the global supply to reduce so we will have an undersupply that will drive prices up. The sooner the better... Feel bad for them though.

How will that help that now IRAN is back on the picture. With them on the picture it can even slide to $15 a barrel for a long time.