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Oil prices rally as IEA sees lower production this year

Oil prices rally as IEA sees lower production this year

Oil & Gas
The International Energy Agency (IEA) has adjusted the crude oil demand recovery outlook for this year by 300,000 barrels per day (bpd) to 5.5 million bpd in its latest Oil Market Report, yesterday. The agency said it expected demand to average 96.6 million bpd in 2021, after crashing by an all-time high of 8.8 million bpd in 2020, under the weight of the COVID-19 pandemic. On the supply side, the IEA projected a recovery of over one million barrels per day, most of it to come from OPEC members after last year’s supply fell by 6.6 million bpd. It also sounded a positive note, leaving space for further improvement in supply during the second half of the year, with the rate of improvement reaching 1.2 million bpd. The report noted, however, that “OPEC+ has taken a more flexib...
Oil communities, stakeholders pick holes on PIB

Oil communities, stakeholders pick holes on PIB

Oil & Gas
• Insist 2.5% of OPEX is inadequate Oil bearing communities and stakeholders in the oil and gas sector have raised concerns over loopholes in the Host Community fragment of the Petroleum Industry Bill (PIB), stressing that unless Nigeria gets the legislation right, age-long challenges in the region may persist. They also noted that the contribution of 2.5 per cent of companies’ previous year’s Operating Expenditure (OPEX) to the Host Communities Trust is open to manipulations, and insufficient to address the risks and consequences of petroleum exploration and production. The stakeholders, who spoke at a forum in Owerri, Imo State, organised by the OrderPaper Advocacy Initiative, insisted that billions of naira are being invested in the region either through the 13 per cent Derivat...
Amidst climate concern, stakeholders insist oil key to Africa’s future

Amidst climate concern, stakeholders insist oil key to Africa’s future

Oil & Gas
• Growing population, dearth of investment, others worry experts   Stakeholders in Africa’s energy sector have insisted that crude oil still has a major role in the continent’s future despite growing concern over climate change. The stakeholders, who gathered at the African Refiners Association (ARA) Week 2020, however, stressed the need for clean energy transition and climate change mitigation policies to address looming challenges. They also called for investments that would enable the region to achieve a proposed 10ppm (parts per million) sulphur fuels for the pan-African transport sector by 2030. This calls for upgrade of refineries, while stringent regulation should be placed on imported petroleum products. Global think tanks, including S&P Global Platts...
Reversing Nigeria’s current economic malaise

Reversing Nigeria’s current economic malaise

Economy
Nigeria is currently fighting on many fronts to keep the balance between a fall in oil prices and the global economic slowdown resulting from the COVID-19 pandemic. Unfortunately, many of the country’s major trade partners are also grappling with the negative effects of the pandemic, compounding the dilemma of Africa’s most populous country. The International Monetary Fund (IMF), had predicted that the Nigerian economy would recede by 5.4 per cent this year, its worst recession in three decades. The contraction comes amid a general slide in the global economy caused by the coronavirus pandemic. Hitherto, the nation’s economy had been wobbling with weak recovery from the 2014 oil price shock to the 2016 economic recession with Gross Domestic Product (GDP) growth tapering around ...
Oil demand to slow by 3.7million bpd for rest of 2020

Oil demand to slow by 3.7million bpd for rest of 2020

Energy
Oil demand for the rest this year may continue to fall by as much as 3.7 million barrels per day (Mb/d), Outlook released by global research body, Rystad Energy, backed the projections with the second wave of Coronavirus pandemic, saying the development would stall demand. Like Rystad Energy, the Organization of the Petroleum Exporting Countries (OPEC), had earlier in the month, revised world oil demand in 2020 to an estimated drop of 8.9Mb/d (bpd), adjusting it up by 0.1Mb/d against last month’s projection. This comes as OPEC+ agreed to ease output cuts. The cartel had agreed on a 9.7Mb/d, but the cuts are slated to expire at the end of July, which is likely to reduce from 9.7Mb/d to 7.7Mb/d. Reopening of economies in Europe and other parts of the world had triggered an increase in oil...
Preserving forex reserves, raising local capacity through import substitution

Preserving forex reserves, raising local capacity through import substitution

Finance
For decades, successive governments in Nigerian resorted to protective measures, including import restrictions and exchange rate control, to manage its foreign exchange (forex) market, and deal with the problems of import and oil dependency. This import substitution policy is usually heralded by an economic crisis, often triggered by the collapse of the oil market, and a significant drop in Nigeria’s oil revenues, which account for 70% of the country’s total revenues. Expectedly, the Central Bank of Nigeria (CBN), followed this well-trodden path in efforts to ensure that Nigeria embraces import substitution and reduces the demand pressure on foreign exchange by importers, and ultimately conserves the nation’s hard-earned reserves. For instance, in June 2015, it ban...
Producers hopeful of $50 oil price, business sustainability from cuts

Producers hopeful of $50 oil price, business sustainability from cuts

Oil & Gas
Although OPEC+ agreed at the weekend to extend 9.7million barrels cuts in daily crude oil production through the end of July, lending oil prices some support, operators in the exploration industry are hopeful that the cuts would be sustained to aid production and business sustainability. In the course of global lockdown, the ensuing energy imbalance affected oil producers and prices such that business sustainability was threatened and capacity to service over N3.4 trillion loans weakened. With the lockdown lifted and oil prices rebounding, African Energy Chamber believes that liquidity challenges will be addressed. According to the chamber, the rebalancing of the market is key for African oil-producing nations to preserve jobs in the sector and give the continent an opportunity to st...
NCDMB unveils platform to boost local technologies in oil industry

NCDMB unveils platform to boost local technologies in oil industry

Oil & Gas
The Nigerian Content Development and Monitoring Board (NCDMB), has unveiled BrentPlus, a series of initiatives that will stimulate innovations in the oil and gas industry and ancillary sectors, and create a platform for local creation of digital technologies. The Executive Secretary of NCDMB, Simbi Wabote, unveiled BrentPlus during a webinar, titled: “Innovating for the future of Nigeria’s oil and gas industry and its linkage sectors.” He explained that one of the strategic initiatives under the Nigerian Content 10-year roadmap is to promote the development of innovative in-country solutions in the oil and gas industry. The webinar was the first by the Board since the outbreak of the coronavirus pandemic, and according to Wabote, it will form part of the new channe...
OGFZA restates commitment to NEPZA, directives on zone management

OGFZA restates commitment to NEPZA, directives on zone management

Business
Oil and Gas Free Zones Authority (OGFZA), has restated its commitment to continue to abide by directives from the Nigerian Export Processing Zone Authority (NEPZA), as well the Ministry of Industry, Trade and Investment. “We will continue to act in accordance with the directives given by the Ministry of Industry, Trade and Investments as well as NEPZA because they are our regulators.” The declaration comes on the heels of recent action taken by oil and gas firms operating in the Free Zones, seeking judicial intervention in the regulation of operations within the Snake Island Integrated Zones. In a statement made available to journalists yesterday, in Abuja, the counsel to the firms, Qudus Mumumey, said the case had already become a court issue since 2008. Mumurney called on the...
Nigeria needs N10.1trillion to improve economy

Nigeria needs N10.1trillion to improve economy

Economy
To ameliorate the impact of COVID-19 and oil price decline, Nigeria may require up to N10.1trillion worth intervention to improve the economy. Specifically, the Nigerian Economic Summit Group (NESG), in its Macroeconomic Outlook Update, titled: “COVID–19, Global oil price and the Nigerian economy,” obtained by The Guardian, estimates that combined government interventions should amount to seven per cent of the gross domestic product (GDP). This, according to NESG, represents a financing gap of N5.6trillion, which must be closed considering the level of decay in the Health sector, coupled with the dominance of informal micro, small and medium scale businesses in the economy, that are in dire need of support. “In the initial 2020 Budget, fiscal deficit stood at N2.1t...

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