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Nigeria, Others Need to Boost Refining Capacity – OPEC

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Opec

The Organisation of Petroleum Exporting Countries has highlighted the need for more refining facilities in Nigeria and other African countries to meet their growing demand for petroleum products.

OPEC, in its 2015 World Oil Outlook, said the inability to keep regional refinery output in line with growing product demand had led to sustained growth in product imports across the African continent.

“Africa is well positioned for downstream capacity additions. Currently, the region imports around 30 per cent of the refined products it consumes. This makes it, in relative terms, by far the largest net product-importing region,” the organisation stated.

The situation exists not only due to insufficient ‘nameplate’ refining capacity, but also because of very low utilisation rates in many of its facilities, the report said.

“With oil demand in the region continuing to grow and with many countries having domestic crude oil available for processing, there is evidently the need and potential for more refining facilities,” it added.

According to OPEC, there are currently only a few projects under construction or in an advanced planning stage in Africa. The largest project under construction is Angola’s Lobito refinery, which will result in the addition of 120,000 barrels per day of capacity coming on stream in 2019. The original design capacity of 200,000 bpd will be reached after the completion of the project’s second phase.

It noted that some capacity expansion could be forthcoming in Nigeria by 2020, either through the rehabilitation of existing refineries – in part to raise their utilisation rates – or through grassroots projects.

Only one of the nation’s four refineries, with a combined capacity of 445,000 bpd, is currently producing petroleum products.

The report stated, “Several refining projects have been announced and Nigeria is currently seeking partnerships with foreign investors for their implementation. However, as of the completion of this outlook, no final decision has been made yet regarding either capacity or timing.

“One project that may materialise in the medium-term is the grassroots 500,000 bpd Dangote refinery and the associated greenfield fertiliser plant in Lagos, Nigeria. If built, this refinery would be Nigeria’s first privately owned and operated refinery.”

Noting the abundant oil and gas resources on the continent, OPEC said, “Adding new refinery capacity is key and integrated refineries that produce fuel products, power and potentially fertilisers could play an important role.”

According to the report, today, Africa has 46 refineries with a total distillation capacity of 3.3 million bpd.

“Except for Libya’s Ras Lanuf refinery, there are no refineries in Africa with integrated petrochemical production, though some refineries have facilities for lubes and asphalt production,” the report added.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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