As companies face threats, Oil & Gas stocks depreciate
Oil and Gas stocks on the Nigerian Stock Exchange depreciated even as global crude oil prices rose.
The United States crude closed higher by 1.5 per cent, while Brent crude increased by almost one per cent.
Analysts said the emergence of yet another militant group in the Niger Delta calling itself ‘WANDE’, which is short for War Against Niger Delta Exploitation, caused investors to fret and sell-off oil and gas stocks.
They said the group threatened to disrupt oil and gas operations of major oil and gas companies unless the region got attention from the government.
According to them, that is enough to make investors sell oil and gas stocks and in fact stay away from the sector. Everyone remembers the damage caused by MEND group in the past and the disruptions they caused.
Even the Niger Delta Avengers made it difficult for oil and gas companies in recent past.
According to EasyKobo, the Nigerian Government has had to pay huge amounts to such militant groups in form of amnesty to keep them calm and not indulge in violence.
The report read in part, “With elections around the corner, it could be the time for such opportunistic groups to emerge and demand more payments and bring the Nigerian government to its knees as such groups have done in past.
“It would be better for the Federal Government to pay these militants quickly so that the economy does not suffer damage because from past experience such outfits are definitely capable of blowing up pipelines and ensuring that the Government does not realise revenue from crude oil production.
“Military action in the Niger Delta will be detrimental to the economy and peace in the region. Already Nigerian army is stretched and lacking in equipment to fight any organised insurgency.
“The war planes that Nigerian air force has acquired are out-dated technology from third world countries that no serious military power would even think about acquiring. Basically Nigeria is not ready for any kind of serious war-like effort and FG should settle with WANDE before the economy suffers.”Source:The Punch