NIGERIA: THE CRUDE OIL ECONOMY

Synterra the Nigeria Risk Management Consultants provide insight into how the oil markets affect the Nigerian economy. Nigeria's reliance on crude oil receipts is total. At a time of increasing volatility and uncertainty this blog seeks to provide an analysis of the effect the global energy markets have on business in Nigeria, their relationship with OPEC and how local policy decision making affects investment opportunities.
NIGERIAS APRIL CRUDE PROGRAM EMERGES

NIGERIAS APRIL CRUDE PROGRAM EMERGES

COVID-19 and the consequent demand destruction is set to affect Nigerian crude as there is simply far too much oil in the market. This is making it difficult to shift cargoes and exerting downward pressure on price differentials. The falling crude price has already caused the IMF to revise downward Nigeria GDP growth. The last time oil prices collapsed it sent the country in to recession in 2014, the economy is only just emerging from that recession.

 

f7f8c4727a011019fe43a7eaa92bf9a5_XL Nigeria set to double oil production

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.

THE HISTORIC OPEC DEAL TO CUT  9.7MBD  THAT DOES NIGERIA NO GOOD

THE HISTORIC OPEC DEAL TO CUT 9.7MBD THAT DOES NIGERIA NO GOOD

Nigeria have agreed to a production cut of 400,000 barrels a day as their contribution to the OPEC+ agreement. This is based on a 23% cut on a production baseline taken from October 2018. Nigeria also produce between 350-400,000 bpd of condensates which are exempt from OPEC cuts. Condensate is a...

Russia-vs-Saudi SAUDI AND RUSSIAN PLOT OIL MARKET

OPEC+ ALLIANCE PLOT TO FIND A WAY TO PLEASE THE OIL MARKET

The out and out oil price war has now entered its next phase and has become the chess game that is the new contest for market share. The trigger for this shift was always going to be China's resurgent crude oil imports and the seeming revival of a region that appears to have put the worst of the COVID-19 pandemic demand destruction behind it&n...

SAUDIS FEEL THE HEAT AS THE U.S. UPS THE PRESSURE ON OIL

SAUDIS FEEL THE HEAT AS THE U.S. UPS THE PRESSURE ON OIL

Saudi Arabia  made what has been described as  a surprise announcement,  it will voluntarily deepen its crude oil output cuts. The announcement stated that this voluntary output cut would take effect from June.

The cut is an additional  1 million barrels per day which will reduce Saudi  production to the lowest level in 18 years. The ostensible reason given by the Saudis is to  hasten  a recovery from the crash in oil price benchmarks which has pitched them  into austerity. According to Energy Minister Abdulaziz bin Salman Al Saud, Saudi Arabia wanted to be ahead of the curve.

WHAT IS BEHIND NIGERIA'S MARGINAL FIELD BID ROUND?

WHAT IS BEHIND NIGERIA'S MARGINAL FIELD BID ROUND?

The Nigerian national oil company has eventually come to its senses and arrived at the position every other rational actor in the industry has advocated and postponed  the full blown Oil bid round which was announced last month as scheduled to take place within 2 weeks. 

NNPC CHOOSE TO PUMP UP THE VOLUME

NNPC CHOOSE TO PUMP UP THE VOLUME

The boss of Nigeria's national oil company NNPC, Mallam Mele Kyari has confirmed in a statement released on Monday that, Nigeria is now  producing  2.3 million barrels of crude oil daily, including condensates. The end of the OPEC+ deal has seen the start of a free for all as the agreement...

OIL PRICES SLUMP AS MARKET LOOKS TO OPEC

OIL PRICES SLUMP AS MARKET LOOKS TO OPEC

Oil price benchmarks suffered further deterioration as the COVID-19 instigated assault weighed heavily on global markets. Oil prices slumped yet again on Thursday,  for the fifth straight day  to their lowest since January 2019. The coronavirus epidemic's  sporadic global outbreak has  intensified  fears of a pandemic that will lead to a...

FINALLY TIME FOR OPEC TO DEAL WITH SHALE

FINALLY TIME FOR OPEC TO DEAL WITH SHALE

TIME FOR OPEC TO TO DEAL WITH US SHALE     This is no time for OPEC+ to cut production and if I were in charge I would maintain production levels as they currently stand. The main beneficiary of any OPEC cut would be shale. According to Moody’s investor service  60%...

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