BY SUNNY CHUBA NWACHUKWU
Sunny Nwachukwu (Loyal Sigmite), PhD, a pure and applied chemist with an MBA in management, is an Onitsha based industrialist, a fellow of ICCON, and vice president, finance, Onitsha Chamber of Commerce. He can be reached on +234 803 318 2105 (text only) or firstname.lastname@example.org
Market forces reasonably determine the direction and how a product’s price is affected or influenced by demand and supply, all things being equal under macroeconomic indices. Presently, the invasion of Ukraine by Russia (the ongoing Russia-Ukraine war) is already shaking the international energy market by disrupting age-long determined, known and established distribution channels and supply routes, especially to the Western bloc. This comes on the heels of a series of economic sanctions imposed against Russian energy exports and supplies (both their oil and gas).
The imposition of sanctions by these Western countries, namely the United States of America, the United Kingdom and the entire European Union (EU), tactically mounts obvious discomforting economic pressures on Russia’s seamless financial flows globally. The essence of such measures and pressures being exerted on Russia is targeted to significantly compel Russian soldiers’ aggression against Ukrainians to be withdrawn from the country. Also, that with these tactical and stringent economic strangulation policies, to lose the battle. For instance, measures applied (to stop funding Kremlin war-machine, in international politics, by disengaging the estimated $1billion daily purchases by Europe, in addition to the estimated US gas exports to easily replace Russia’s), are indirect weapons meant to squeeze and completely weaken the Russian military machines, commensurate enough to match and stop further escalation of the offensive.
The impact already has a noticeable Russian energy supplies shock felt in some quarters, globally. More so, when such impact significantly leaves a toll among Russian-energy’s dedicated consumers, like Germany, who solely rely on Russia for gas supplies. This significant effect on global energy market forces is because of the volume of the market share Russian energy supplies control globally; being the second largest producer of crude oil (after Saudi Arabia), and at the same time, the largest producer of gas, globally. Energy prices have soared within this period, but the impact is being followed up not to get out of hand. Hence, moves like the recent visit to the Gulf region by the UK prime minister, Boris Johnson, where he urged the oil producing countries in the region to increase their daily output. These efforts are aimed towards offsetting any eventuality that might arise from Russian supplies being completely shut.
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Energy pricing presently keeps almost all nations of the world on their toes because the price of crude oil recently got to an all time high of as much as $117 per barrel. Such definitely has a ripple effect on finished products, especially refined products like petrol. Nigeria at present is
not left out, as the economy relies solely on imported fuels (including aviation fuel for aircrafts).
On another level, the much talked about Trans Saharan Pipeline to Europe, for natural gas supplies, needs to be given some kind of focused attention, at a time like this when Russia’s energy supplies to the European countries are under probability and unpredictable, because of the ongoing Ukrainian invasion. From a business point of view, such could pose an opportunity for gas supplies to Europe, to replace the vacuum that might have arisen from Russian gas disengagement; should such a project have been put in place for usage between Africa and the European countries. This strategy draws the attention of business organisations like the newly created Nigerian National Petroleum Company Limited (NNPC Ltd) to always be focused and think proactively, to latch on opportunities such as the present crisis offers.
Though the US imported 200,000 barrels per day of Russia’s oil last year, US and its allies are poised to release 60 million barrels of oil from their reserves, to help offset any shortfall because, it is obvious that supplies could be disrupted if the present aggression against Ukrainians persists, with escalation of the sanctions. Germany’s economic and energy minister once warned that the boycott on Russian oil and gas will hurt the German population more than Putin. Such fear is allayed based on the fact that Russia supplies 40%+ of gas to Europe; and is also responsible for about 10 percent of the global oil production.
Nigeria needs to learn a big lesson from the present global energy calculations by managing the economy in a manner that her own hydrocarbon resources should be readily available; and properly positioned, to always exploit any market opportunity to gain access into new supply frontiers. Making money seems simple, but it demands detailed proactive and strategic planning to position to pluck any low hanging fruit; or the slightest opportunity the market offers for financial exploits. This is because real growth in business can only occur when a business is ready to take up new demand opportunities, and at the same time, keep reducing avenues for financial leakages.
This, sincerely, cannot be ascribed to the present scenario in the nation’s oil and gas sector of the economy. To achieve such a feat, demands patriotic and dedicated workforce in the industry concerned. Our own operatives and the managers of activities in the oil industry, should be ever ready to take the advantages that the global energy market forces offer, from time to time, for the simple reason of making the nation’s economy stronger at all times.
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