"What to expect from the Oil and Gas sector in 2024"

" What to expect from the Oil and Gas sector in 2024 \r\nStanding out prominently among the sectors, the oil and gas index exhibited exceptional performance, recording an impressive surge of 125% over the year to emerge as the best-performing index of the year.\r\n\r\nThis optimistic outlook can be attributed to a synergy of factors, foremost among them being a series of policy reforms initiated by the administration of President Bola Tinubu since his inauguration in May.\r\n\r\nA major shift was the discontinuation of the hugely expensive fuel subsidy program, a contentious initiative that had long been a drain on public coffers.\r\n\r\nThis decision, seen as a crucial move towards fiscal prudence, reignited interest in energy stocks on the NGX. The consequent influx of capital not only significantly bolstered liquidity in the market but also spurred a more widespread upswing across various sectors.\r\n Oil and gas index performance \r\nAs per data sourced from the Nigerian Exchange Limited and tracked by Nairametrics, the oil and gas index, reflecting the performance of quoted oil and gas firms on the NGX, surged by an impressive 125.5% or 580.58 basis points.\r\n\r\nIt concluded the year at 1,043.06 index points, a significant ascent from the opening index of 462.48 at the commencement of January 2023.\r\n\r\nThe constituents of the NGX oil and gas index include prominent oil marketing and production companies such as Conoil, Eterna, Japaul Gold and Venture, MRS Oil Nigeria, Oando, Seplat Energy, Total Nigeria, and Capital Oil.\r\n\r\nFollowing closely, the NGX banking index also recorded substantial gains, with an increase of 114.89% or 479.7 basis points. It wrapped up the trading year at 897.20 index points, a notable climb from the initial figure of 417.50 in January.\r\n\r\nInvestment analysts in an exclusive chat with Nairametrics believed that the current growth of the index showed that the sector points at sustaining its position at the end of the year following positive sentiment from investors.\r\n\r\nThey added that optimism abounds in the Nigerian oil and gas sector for 2024, fueled by deregulation, liberalization, and anticipated major listings on the Nigerian Exchange Group (NGX).\r\n Financial analysts outlook \r\nThe Managing Director of Crane Securities Limited, Mr. Mike Eze, in an exclusive chat with Nairametrics predicts a surge in activity as these factors converge.\r\n \r\n \t \u201cWe have very high expectations for the oil and gas sector this year,\u201d said Mr. Eze in a recent interview with Nairametrics. \u201cDeregulation and liberalization efforts are creating a more attractive environment for investment, and we expect to see a significant uptick in activity.\u201d \r\n \t One of the most anticipated developments is the potential listing of the Nigerian National Petroleum Corporation (NNPC) on the NGX. \r\n \t \u201cWe believe NNPC could list as early as the first quarter of 2024,\u201d Mr. Eze elaborated. \u201cTheir strong performance in recent years has paved the way for a successful public offering, which would be a major boost for the market,\u201d Eze said. \r\n \r\nHe noted that the arrival of Dangote Refinery also adds to the excitement, adding that with its official launch expected soon, the refinery\u2019s potential listing further enhances the sector\u2019s appeal.\r\n \r\n \t \u201cDangote understands the importance of market participation and its contribution to their international stature,\u201d Mr. Eze noted. \u201cTheir listing would send a strong signal of confidence in the Nigerian market and attract further investment.\u201d \r\n \r\nLooking forward, Mr. Eze anticipates significant returns for investors who enter the oil and gas sector during this pivotal period.\r\n \r\n \t \u201cRobust activity, high dividends, and a generally healthy business climate point towards a lucrative year for those who capitalize on the opportunities emerging in this sector,\u201d he concluded. \r\n \r\nMr. Olatunde Amolegbe, Managing Director of Arthur Steven Asset Management Limited and former President of the Chartered Institute of Stockbrokers (CIS), expressed optimism regarding the recent deregulation of the Oil and Gas industry in Nigeria.\r\n\r\nIn his view, this long-awaited move paves the way for potential growth in investment inflows to the sector over the medium to long term, potentially leading to enhanced overall performance.\r\n<div class=\"ai-viewport-1\" data-insertion-position=\"prepend\" data-selector=\".ai-insert-19-46132771\" data-insertion-no-dbg=\"\" data-code=\"PGRpdiBjbGFzcz0nY29kZS1ibG9jayBjb2RlLWJsb2NrLTE5JyBzdHlsZT0nbWFyZ2luOiA4cHggMDsgY2xlYXI6IGJvdGg7Jz4KPCEtLSBBY3RpdmUgLS0+CjwhLS0KPGRpdiBhbGlnbj0iY2VudGVyIj48YSBocmVmPSJodHRwczovL2phaXpiYW5rcGxjLmNvbS8iIHRhcmdldD0iX2JsYW5rIiByZWw9Im5vb3BlbmVyIG5vcmVmZXJyZXIiPjxpbWcgY2xhc3M9ImFsaWduY2VudGVyIHdwLWltYWdlLTE3NzAzMyBzaXplLW1lZGl1bSIgc3JjPSJodHRwczovL2kuaWJiLmNvL2JkdlFjRGcvTkFJUkFNRVRSSUNTLUNSRUFUSVZFLUZPUi1SRU5FV0FMLTEuanBnIiBhbHQ9IkphaXogYmFuayIgLz48L2E+PC9kaXY+LS0+CjwvZGl2Pgo=\" data-block=\"19\">\r\n \r\n \r\n \r\n \t \u201cWith the removal of regulatory hurdles, I expect increased investor interest in the oil and gas space,\u201d Amolegbe commented. \u201cThis could significantly boost the turnover of companies within the downstream sector, though it\u2019s crucial to monitor how rising costs may impact overall profitability.\u201d \r\n \r\nAmolegbe\u2019s cautious optimism acknowledges the potential benefits of deregulation while also highlighting the need for further assessment of potential challenges, such as cost inflation.\r\n\r\nTo him, this balanced perspective offers valuable insights for both industry stakeholders and investors considering opportunities in the newly reformed sector.\r\n\r\nMr. David Adonri, Executive Vice Chairman of Hicap Securities Limited, Adonri said that with the commencement of domestic crude oil refining and the anticipated listing of Dangote Refinery, the Nigerian oil and gas sector is poised for a dominant performance in the 2024 equities market.\r\n\r\nAdonri noted that this news offers promising prospects for investors seeking lucrative opportunities in the Nigerian economy.\r\n\r\nHe said that the long-awaited commencement of domestic crude oil refining in Nigeria marks a significant milestone for the nation\u2019s energy sector.\r\n\r\nAccording to him, this shift towards self-sufficiency in refined petroleum products is expected to attract substantial investment and boost economic growth.\r\n \r\n \t \u201cWith the commencement of domestic refining of crude oil, the petroleum sector is expected to remain attractive in 2024,\u201d he said. \r\n \t The highly anticipated listing of Dangote Refinery, Africa\u2019s largest single-train refinery, further fuels optimism for the oil and gas sector. Its entry into the Nigerian Stock Exchange (NGX) is expected to be a landmark event, injecting significant liquidity and attracting both local and international investors. \r\n \t \u201cThe market is eagerly awaiting the listing of Dangote Refinery this year,\u201d notes Mr. Adonri. \u201cWith this, the Oil\/Gas sector will be dominant in the Equities Market.\u201d \r\n \r\nNigeria\u2019s oil and gas sector is poised for a significant upswing in 2024, driven by a confluence of positive factors, according to Mr. Victor Chiazor, Analyst and Head of Research at FSL Securities Limited. Chiazor projects a surge in activity within the sector due to increased investments by Dangote Refinery and the positive impact of subsidy removal.\r\n \r\n \t \u201cThe long-awaited completion and operation of Dangote Refinery, Africa\u2019s biggest single-train refinery, is expected to be a game-changer for the Nigerian oil and gas landscape. \r\n \t This massive new player will not only boost domestic refining capacity but also attract further investments throughout the oil and gas value chain. \r\n \t The recent removal of fuel subsidies, while initially causing price adjustments, is expected to have long-term benefits for the sector. \r\n \t This move promotes market efficiency, attracts foreign investment, and encourages exploration and production activities,\u201d he said. \r\n \r\nKasimu Garba Kurfi, Managing Director\/CEO of APT Securities and Funds Limited, also shared an optimistic outlook for the Nigerian oil and gas sector in 2024, particularly regarding its potential for capital gains and share appreciation. Speaking with Nairametrics, he highlighted several key factors driving his positive expectations:\r\n \r\n \t Recent policy changes, such as the removal of fuel subsidies and continued emphasis on deregulation, are expected to create a more attractive investment environment within the sector. This could lead to increased exploration, production, and refining activities, creating a ripple effect throughout the value chain. \r\n \t The imminent launch of Dangote Refinery is viewed as a game-changer. It will significantly enhance domestic refining capacity, potentially reducing dependence on imported fuels and stimulating further investments in related sectors. \r\n \t While subject to fluctuations, current forecasts suggest stable or even rising oil prices in 2024. This bodes well for the profitability of upstream and downstream oil and gas companies, potentially translating into higher share prices and attractive capital gains for investors. \r\n \r\n What you should know: \r\nDespite the potential challenges, Nigeria\u2019s oil and gas sector presents a compelling opportunity for investors and stakeholders in 2024.\r\n\r\nWith increased activity driven by Dangote Refinery\u2019s investments and the benefits of subsidy removal, the sector is well-positioned to play a vital role in driving economic growth and job creation.\r\n\r\nIt is believed that the confluence of promising factors positions the Nigerian oil and gas sector as a significant driver of capital gains and share appreciation in 2024.\r\n\r\nInvestors seeking exposure to this potentially lucrative sector should carefully assess individual companies and risks before making investment decisions.\r\n\r\nHowever, cautious optimism and effective management of potential challenges will be key to unlocking the full potential of this exciting sector."

"What to expect from the Oil and Gas sector in 2024"

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