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INTERESTED IN NIGERIA CRUDE OIL

Items filtered by date: April 2019

Aiteo declares force majeure on Nembe Creek Trunk line (NCTL) after a fire incident. The company an indegenous E&P player produces 150,000 bpd of oilIn a statement released by the company they confirmed the fire outbreak was discovered by the company’s surveillance team on Sunday 21st of April. Aiteo explained that despite its urgent intervention and containment action, they were constrained to shut in injection as well as other related operations into the NCTL. I

The NCTL has recently enjoyed uninterrupted operation prior to this incident, raising the spectre that the fire may have been an act of sabotage by one of the many militant groups that operate in the Niger Delta.The company added that relevant investigations were continuing while further information about the remote and direct causes of the fire would be communicated as soon as these became available. Aiteo Group acquired block OML 29 from Royal Dutch Shell and has emerged as one of Nigeria’s leading oil and gas companies.

The fire has created further disruption as Nembe Creek T^runk Line is one of the two major evacuation pipelines for both Amenam and Bonny Light crude grades. Royal Dutch Shell along with Total have been forced to declare force majeure. Exports of Amenam are typically around 100,000 bpd with May and June loadings for Bonny Light about twice that amount.

The NCTL has been a target for the Niger Delta Avengers a militant group which boasts of broadbased support in the region and who have been involved in targetting oil and gas installations. It remains to be seen if this incident signals an upsurge in violence in the region. In any event a single simple and perhaps strategic fire has taken over 300,000 bpd production of sweet light crude off the market

Published in OIL MARKETS
Sunday, 28 April 2019 21:16

PICK UP THE PHONE OPEC, ITS DONALD

The gasoline prices are coming down. I called up OPEC. I said, ’You’ve got to bring them down. You’ve got to bring them down’, and gasoline’s coming down,” US President Donald Trump's call to OPEC has created much debate. It is now clear that no such call took place. We no longer need to attempt to divine the actions of a President that full in the knowledge that his mis-speak would be exposed, he seems powerless to overcome his impulsive behavior.

The significance is however not that no such call was made, but that Trump has created the narrative that OPEC are the villans, the cause of high gasoline prices and restricting OPEC is the solution to reducung high gasoline prices. Such a narrative effectively exempts US foreign policy from any culpability in the increase in gasoline pricing. Trump asserted erroneously that as a consequence of his call to OPEC, gasoline prices had began to fall. The simple fact is that schitozphrenic US foreign policy is the definitive reason for increase in global oil prices

Published in OIL MARKETS
Wednesday, 24 April 2019 18:05

KACHIKWU COMES CLEAN RECANTS ON REFINERIES

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 remain unprofitable. He further reneged on his unrealistic committment to have the nation's refineries working at template capacity by the end of 2019. This effectively means that Nigeria will still face the burden of importing refined products despite the best efforts of the current Administration. The Minister speaking on – Hard Copy, a Nigerian take on BBC's 'Hard Talk' stated that with huge petrol under-recovery in the books of the NNPC, it would be difficult for the corporation to record any profit. According to the Minister, 'Under Recovery', the term employed to describe the difference between the actual cost of the fuel and its sale price which equates to a loss of about NGN40 per litre ($0.11/Ltr). The Minister openly admitted in what can only be described as a total and stark admission of failure when stating

“I think that if there is one area where I feel sad, it is certainly the refineries because there is a huge gulf between my expectations and the pronouncements that I had made in terms of where I’d like to be and what we have been able to achieve."

Published in OIL MARKETS
Monday, 22 April 2019 21:37

SHALE THE DOTCOM THAT WEARS ROBES

In the past decade, the shale-fracking revolution has made the U.S. the world’s largest oil-and-gas producer and reshaped markets. Despite this shale has been a dreadful impulse for most investors. For example Since 2007, shares in an index of U.S. producers have fallen 31%, while the S&P 500 rose 80%. Energy companies in that time have spent over $280 billion more than they have generated from operations on shale investments.

Recently the U.S. government has cut its oil production forecast for the first time in six months as drillers scale back in smaller shale plays in the U.S. , the Permian and the Gulf of Mexico. Whilst crude output is still anticipated to reach record levels, the Energy Information Administration (EIA) revised down its 2019 forecast to 12.3 million barrels a day -- 110,000 barrels-a-day lower than the previious forecast. In 2020, production is expected to reach 13.03 million barrels a day --

Published in OIL MARKETS
Monday, 22 April 2019 17:06

HAWKS SWOOP AS IRAN WAIVERS GO TO ZERO

It seem the NSA John Bolton and the hawks in the Trump Administration have finally won the argument. Washington has confirmed that there will be no waivers for customers of Iranian Oil after 2nd of May. Oil jumped to a new 6 month high as  the news hit the headlines. This day always seemed inevitable, what is not so clear is the much anticipated fallout. Already China, the largest consumer of Iranian oil has accused the US of over reaching their jurisdiction. They went on to say “China’s cooperation with Iran is open, transparent, reasonable and legitimate, and should be respected,”According to White House Press Secretary Sara Sanders “The U.S., Saudi Arabia and the United Arab Emirates, three of the world’s great energy producers, along with our friends and allies, are committed to ensuring that global oil markets remain adequately supplied,” . President Donald Trump further  tweeted that “Saudi Arabia and others in OPEC will more than make up the Oil Flow difference in our now Full Sanctions on Iranian Oil. ”

US waivers expire  on May 2. These  allowed China, India, Japan, South Korea, Italy, Greece, Turkey and Taiwan to continue importing Iranian crude without  retaliatory U.S. sanctions. With the end of the waivers, the buyers face being cut off from the American financial system if they buy Iranian oil.  The difficulty for the Buyers comes from not only having to find suitable replacement grades but the increase in prices and the effect that will have on profits. It seems unconscionable that Japanese, Korean and Indian companies should be made to subsidise this US action. There is also the issue of the OPEC production cut agreement to consider, if we are to believe the US statement then the production cut agreement has effectively been terminated. The future of OPEC seems far from secure.  The special relationship between Washington and Riyahd undermines the basis for OPEC, where two member states are under US sanctions one of which holds the presidency of the organisation.

Tehran have warned that it will close the  Strait of Hormuz in tetaliation for the sanctions. Were such an act to take place', it would undoubtedly lead to conflict with oil prices spiralling out of all control. Were any such conflict arise however it would provide Iran the legal basis for closing the Straits. The ostensible objective of the sanctions is to get Tefhan to abandon its nuclear ambitions and as such the US can always rely on the Saudis for support

 

 

 

Published in OIL MARKETS
Friday, 19 April 2019 21:43

WHEN ARE OPEC QUOTAS NOT QUOTAS?

Amidst Trump tweets and the threat that the US Congress will seek to outlaw OPEC, oil markets remain far from free. Iran and Venezuela both under American sanctions create further imbalance and supply restrictions which further provide  support for bullish sentiment,  precisely the opposite outcome the Trump administration purport to  be seeking. It seems perverse that geo-political issues are the primary movers in global oil markets, fed and watered by US foreign policy objectives. History has shown that these sometime conflicting and othertime confounding policy objectives provoke unintended consequences whilst further complicating an already complex situation.

Published in OIL MARKETS
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