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Wednesday, 01 May 2019 13:10

NIGERIA TO DOUBLE OIL PRODUCTION BY 2025


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 Corporation (NNPC), admits that the target is aggressive but appeared certain when he said last week that Nigeria is committed to
meeting it. The GMD has a penchant for making overly optimistic if not widly unreasonable predictions which only serve to undermine confidence in the National oil company.

Nigeria currently pumps around 2.2 million bpd in both crude oil and condensate. In March Nigeria’s crude oil production stood at 1.733 million bpd, up by 11,000 bpd
on the previous month. Over 10 years ago Nigeria commited to increase oil reserves to 40 billion barrels, that commitment never really looked plausible and has been kicked down the road until 2025 too. Nigeria has not had a bid round for over 10 years during which the passage of the Petroleum Industry Bill, the legislation created to provide certainty to investors has not been passed. It is hard to see how any investment can be made when the legislation that is meant to provide the fiscal and regulatory regime has not be passed.

Published in OIL MARKETS

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
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

The narrowing spread between Northwest European diesel and gasoline cracks had helped support some Nigerian crude grades which have suffered from a lack of European demand, traders said.

The ARA front-month diesel crack was assessed at $14.54/b Monday, with the benchmark ARA front-month EBOB gasoline crack at $9.45/b. The spread between the two was $5.09/b, slightly wider than $4.53/b Friday — the narrowest differential since August 2018.

The recent narrowing of the spread has come on the back of stronger gasoline values, which have led to some Nigerian grades not falling below a certain price threshold. The gasoline strength is boosting demand for the country’s lighter sweeter crudes which are rich in the product.

Published in OIL MARKETS
Thursday, 28 March 2019 13:44

NIGERIA CRUDE OIL GRADES STAY STEADY

West African crude differentials were finding support from solid demand, traders said on Monday, while newly issued buying tenders were in focus.

April loading programmes were continuing to clear and around 20 remain. Exxon has sold some April-loading Qua Iboe, a trader said.

Qua Iboe for April was offered at dated Brent plus $1.70 to $1.80 a barrel, and May Exxon was offering May-loading Qua at a more ambitious dated plus $2.20, traders said.

Indian Oil Corp. is running a buy tender for crude cargoes loading May 20-29, a trader said. Uruguay’s state-run oil company ANCAP is also running a buy tender, but further details were not immediately available.

 

Published in OIL MARKETS
Monday, 18 March 2019 00:13

CONGRESS PONDER NOPEC

US PONDER NOPEC

nevitably aided and abetted by increases in oil prices and a US President who has been a long term critic of OPEC, the No Oil Producing Exporting Cartels (“NOPEC”) Act has re emerged . The act seeks to hold OPEC member states liablefor violations of U.S. antitrust legislation  by removing their sovereign immunity shield for what is deemed as OPEC’s collusive behaviour in its attempts to limit global crude oil production to manipulate price outcomes. The NOPEC bill is a re-incarnation of legislative attempts that have variously been abortively  introduced over 15 times since 1999. he NOPEC bill passed by the House Judiciary Committee last month could go to the floor this summer for a full vote. A different bill in the Senate also seeks to rein in OPEC by opening the door to complaints at the World Trade Organization if OPEC continues to pursue its policy of production cuts as a means to support oil prices.

Published in OIL MARKETS
Monday, 18 March 2019 00:10

NIGERIA'S OPEC DILEMNA

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.

Published in OIL MARKETS
Monday, 18 March 2019 00:09

NIGERIA TIME TO HEDGE CRUDE OIL

TIME TO HEDGE OIL PRODUCTION

Following the longest consistent bear market and losing streak since 1984 the Dated Brent benchmark plummeted from a height of $86.74 per barrel in early October a 4 year high to $60.21 per barrel a lost of 30% of its value or just under $25 a barrel . Unlike many experts who predicted a bull market that would see the Dated Brent break the $100 barrier, this analyst rightly predicted the intervention of US foreign policy and the newest element of fundamental analysis of the oil markets, "The Trump Tweet". Market Analysts and traders have had to contend with imponderable inventory reports emanating from the EIA jolting the market with unexpected inventory builds.

Published in OIL MARKETS
Monday, 18 March 2019 00:06

IS OIL POISED FOR A BREAKOUT?

IS OIL POISED FOR A BREAKOUT?

 

Against the backdrop of US-China trade negotiations both WTI and Brent saw the highest price finish for a front-month contract since Nov. 19, according to Dow Jones Market Data. Week to date, WTI prices were 5.4% higher, while Brent jumped by 6.7%. Brent crude on Friday topped $66 a barrel for the first time this year, hitting a roughly three-month closing high at $66.25 and rising 6.7 percent this week. Meanwhile, U.S. West Texas Intermediate crude approached $56 on Friday, settling 2.2 percent higher at $55.59 a barrel, the best closing prices since Nov. 19.  OPEC earlier in the week reported its crude output had fallen by nearly 800,000 barrels a day in January to average 30.81 million barrels a day, with most of the cuts coming from Saudi Arabia. The International Energy Agency’s monthly oil market report, also released this week, reported the Saudis had cut production by 400,000 barrels a day last month, to average 10.24 million barrels a day. Saudi Arabia, pledged earlier this week to cut output further in the coming months, citing oil minister Khalid al-Falih, who said the country would cut an additional 500,000 barrels a day to take production to 9.8 million barrels a day in March.

Published in OIL MARKETS
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