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Nigerian state oil company NNPC has announced that 132 companies have participated in the bid for the highly sort after and much prized right to crude oil for product swap tender. NNPC issued the tender for the contract in March after extending the previous contract to June 2019. The Direct Sales Direct Purchase contract
evolved from the various different original offshore processing agreements. These agreements were bought in after the import subsidy scandal which saw numerous
companies implicated in fraudalent practices such as round tripping and outright false declarations of cargoes. Because the Government regulate petrol prices at a
cap below the landing cost, importers were required to reconcile the difference between their actual cost of importing and the regulated price in accordance with
an approved template.

The subsidy scandal cost Nigeria an estimated $6.8bn which is far in excess of any amount needed to repair the nations run down and dilapidated Refineries. But the
real scandal must be that

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.

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

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

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."

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 --

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.

Thursday, 28 March 2019 19:35

PIGB ANALYSIS

 

PIGB ANALYSIS

the Nigerian oil and gas industry must establish a strong and balanced board of directors; select chief executives and senior management based on proven competence and integrity; guide corporate strategy and monitor corporate performance; establish appropriate succession plan; and monitor effectiveness of the governance arrangements and change as necessary

 The newly established commercial entities are expected to be governed in line with the provisions of the Code of Corporate Governance issued by Nigeria’s Securities and Exchange Commission.However, the bill does not include recommendations to address possible conflicts that may arise between its provisions and those of the SEC Code, according to the analysts, who opined that to prevent possible ambiguity, there will be a need to emphasise the superiority of the provisions of the bill over those of the SEC Code, where such conflicts arise.

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.

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