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NIGERIAN NEWS

PRAISE SINGERS  GO TO "GREET" NEW  GMD NNPC

PRAISE SINGERS GO TO "GREET" NEW GMD NNPC

04 August 2019

If journalism is to have meaning, to fulfill its raison d'etre, then it must be about speaking truth to power; giving a voice to the voiceless. The National Chairman of...

IS IT A NIGERIAN GAS FLARE COMMERCIALISATION PROGRAM ?

IS IT A NIGERIAN GAS FLARE COMMERCIALISATION PROGRAM ?

31 July 2019

The Nigeria Gas Flare Commercialisation Programme (NGFCP) is a prime example of a project well concieved but poorly executed and unlikely to achieve most of its objectives despite its inherernt...

VR CAPITAL BUY 25% OF P&ID AS NIGERIA FACE $9BN FINE

VR CAPITAL BUY 25% OF P&ID AS NIGERIA FACE $9BN FINE

05 June 2019

First, a health warning. This article is about recalcitrant, inept and quite possibly corrupt Nigerian politicians and government ministers. It is certainly about incompetence and misconduct in public office. It...

DISASTER AS UNEMPLOYMENT LEAPS BY 30%  TO 20.9m

DISASTER AS UNEMPLOYMENT LEAPS BY 30% TO 20.9m

29 May 2019

Nigeria is sleepwalking into a disaster which has the potential to unleash instability, insecurity and crippling hardship. Unemployment is always a cause for concern, it is the clearest indication that...

 NIGERIA NGIGE UNDEREMPLOYED OR UNEMPLOYABLE?

NIGERIA NGIGE UNDEREMPLOYED OR UNEMPLOYABLE?

08 May 2019

Working on the assumption that the Minister of Labour and Employment, Senator Chris Ngige has not been misquoted it is difficult to understand his recent pronouncement and what now seems...

NIGERIA ANOTHER MOU ANOTHER DAY

NIGERIA ANOTHER MOU ANOTHER DAY

01 May 2019

Nigeria has announced ambitious plans to double its oil production by 2025, targetting 4 million bpd in six years’ . Maikanti Baru, Group Managing Director at the Nigerian National Petroleum...

NNPC REFINERY WOES 2019

NNPC REFINERY WOES 2019

24 April 2019

The Nigerian Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has not unpredictably, stated that Nigeria’s continuous subsidy of petrol consumption means the Nigerian National Petroleum Corporation (NNPC) will...

NIGERIA OPEC STAND FIRM

NIGERIA OPEC STAND FIRM

28 March 2019

Nigeria and other member countries of the Organisation of Petroleum Exporting Countries (OPEC) as well as their non-OPEC allies led by the Russian Federation have said they are committed to...

PALM OIL PRODUCTION UNDERPERFORMS

PALM OIL PRODUCTION UNDERPERFORMS

18 March 2019

PALM OIL PRODUCTION A MEAGRE PERFORMANCE Nigeria from gaining a substantial share of the global oil palm industry now worth $62 billion annually, casting doubts on government’s ability to grow...

NIGERIA REFINING THE VISION

NIGERIA REFINING THE VISION

18 March 2019

NIGERIA REFINING THE VISION Nigeria is the only OPEC member country that imports gasoline (PMS) and holds the dubious distinction of being the largest importer in the world. The Nigerian...

IS THE PGB FATALLY FLAWED?

IS THE PGB FATALLY FLAWED?

18 March 2019

IS THE PIGB FATALLY FLAWED? Ten years after the Petroleum Industry Bill began its tortuous odyssey which has included the Bill being broken into four portions, both houses of the...

CBN PUMP UP THE T-BILLS

CBN PUMP UP THE T-BILLS

18 March 2019

CBN PUMP UP THE T-BILLS The Central Bank of Nigeria (CBN) plans to raise a total of N1.809 trillion from the debt market, in the first quarter of 2019.This is...

TIN EXPORTS NIGERIA

TIN EXPORTS NIGERIA

17 March 2019

TIN EXPORT NIGERIA Synterra are able to export high grade tin ore from Nigeria. We agregate the Mining production of a number of artisanal miners and consolidate volumes for exportSynterra...

BERYLLIUM MINING OPPORTUNITIES

BERYLLIUM MINING OPPORTUNITIES

17 March 2019

The Nigeria Solid Mineral and Mining Sector has in effect made the great leap forward which will now allow investors to take advantage of the vast mineral potential Nigeria possess....

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Monday, 18 March 2019 00:10

NIGERIA'S OPEC DILEMNA

Written by Femi Ogunkolati

NIGERIA’S OPEC DILEMNA

Oil prices plunged by more than 4 percent on Monday, and the selloff continued in early trading on Tuesday, pushing WTI down below $48 per barrel amid reports of rising U.S. oil inventories at a time when global equities were sharply down. Oil prices dropped 4 percent, weakening for a third consecutive session as reports of swelling inventories and forecasts of record U.S. and Russian output. U.S. crude oil dropped $2.04, or 4.1 percent, to a low of $47.84, its weakest since September 2017, before recovering to around $48.53. Brent crude lost $2.41, or 4.0 percent, to a 14-month low of $57.20.

 “A large part of the slump is due in part to a broader market sell-off, with both U.S. and Asian equity markets coming under pressure,” Both the S&P 500 and the DJIA are heading for the biggest December fall in U.S. stocks since 1931. According to Bank of America Merrill Lynch’s December investor survey, the worst outlook in a decade. The OPEC+ cuts still are not doing very much to boost oil prices, dashing hopes for many U.S. shale producers.With companies in the process of formulating their budgets for 2019, the prospect of $50 oil sticking around raises questions about the heady production figures expected from shale production. The U.S. dollar and oil prices have tumbled as fears about a slowing global economy has gripped investors, just as the U.S. Federal Reserve looks set this week to deliver its fourth interest rate hike of the year.

 The IEA expects U.S. oil production to grow by 1.3 million barrels per day (mb/d) in 2019. But oil prices will impact those predictions. “Total U.S. shale oil growth is highly sensitive to WTI prices in the $40-60 range,” Morgan Stanley wrote in a December 13 note. The investment bank said that shale producers are growing more sensitive to prices below $60 but less sensitive to price spikes above $60. “If WTI remains around current levels (~$50/bbl), US growth will slow.”

 

 Saudi Arabia have stated they will require oil prices higher than $84/b to avoid running another budget deficit, analysts warned after the kingdom announced record government spending in the state budget for 2019. So when it pushed for oil production cuts at the OPEC+ meeting Saudi Arabia had little option but to defy the Trump administration , gambling that the White House would not extract retribution despite some severe pressure fromPresident Trump ahead of the OPEC summit in Vienna. the bet seems to have paid off.

 

 “Saudi Arabia today had a 'Saudi first' policy,” Helima Croft, global head of commodity strategy at RBC Capital Markets, said shortly after OPEC+ announced its production cuts . Saudi Arabia’s decision to push for oil production cuts was inevitable. The extreme budgetary pressure facing Riyadh from low oil prices is vastly more concerning than any legal or political action from the U.S. Congress or the White House. And absent a deal in Vienna, oil prices could have fallen even further.

 

OPEC’s output cut equated to 2.5 per cent of total production based on October production levels. This means Nigeria’s production is expected to drop by a minimum of 43,775 bpd to about 1.71 million from January 2019. However the production cuts are limited to crude oil and not condensates. Nigeria produces anywhere from 400 -500,000 bpd. Though Nigeria has enjoyed 3 exemptions in the past, the fragile nature of the country's finances and the need to continually fund budget deficits by issuing debt underlines Nigerias need for US dollar receivables. The conundrum is a difficult proposition with Global economic growth revised down and potential oversupply unleashing a sustained bear market, a lower barrel price does nothing to either stimulate investment or stabilise prices. The Minister of State in a recent address highlighting the acheivements of NNPC projected an increase in production capacity to 3.3 million bpd over the next 3 years.

 

 Unless the Trump Administration are prepared to make good on the Iran sanctions, Nigeria will be faced with the cruel irony of having exports limited by quota. This militates against potential investment decisions. OPEC quota are set broadly on proven reserves. Nigeria's reserves have not grown in the last 10 years which means save for negotiating increased production quotas in the OPEC, it is difficult to see how production would not be curtailed.

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