The Minister of State for Petroleum, Dr. Ibe Kachikwu, has said that Nigeria will have to increase oil output by an average of 900,000 barrels per day (b/d) in order to recover crude oil that has been shut in to a series of militant attacks on oil and gas assets in the Niger Delta in recent months.
Kachikwu, who spoke to CNN’s Richard Quest last night, however said he was not particularly optimistic about the possible talks on a production freeze by other oil producing countries to bolster prices, saying similar efforts a few months ago had failed.
Despite his lack of confidence, the price of crude oil rose yesterday following reports that Russia and the Organisation of Petroleum Exporting Countries (OPEC) may resume dialogue on a production freeze.
The petroleum minister said the federal government was in continuing dialogue with militants and their representatives in the Niger Delta and expressed confidence that in the next one or two months, a resolution will be reached to end the attacks on oil assets.
“There’s a lot of dialogue, a lot of security meetings and we expect that in the next one or two months, we will arrive at a lasting resolution on the problem in the Niger Delta,” he said.
He added that Nigeria would need to produce on average 900,000b/d extra to recover oil and the attendant revenue lost to the militancy in recent months.
“We are producing some 1.5 million barrels per day and would need on average 900,000 barrels per day to catch up on what we have lost. If we can achieve peace, this will be feasible,” he said.
However, when he was reminded by Quest that an extra 900,000b/d would run contrary to possible talks next month on a production freeze in order to shore up oil prices, Kachikwu said he was not optimistic that a consensus could be reached on an output cap, as efforts in the past had failed.
“I’m not too optimistic about an output freeze, because we tried this in the past and it failed.
“Also, OPEC accounts for 30 per cent of total global output, so we will need to be aggressive in our engagements with producers that account for 70 per cent of output, so it is only if a consensus is reached, then me have some hope,” he explained.
On yesterday’s criticism by parents of the Chibok girls that the military and its resources were being diverted to secure oil facilities instead of recovering the schoolgirls who were kidnapped from their school by Boko Haram two years ago, he said it was not true that the girls were less important than oil facilities in the Niger Delta.
“It is not true that oil facilities are more of a priority than the Chibok girls. As you know President Muhammadu Buhari from the outset of his administration built a coalition with neighbouring countries to defeat the terrorism in the North-east.
“He also had to set up a panel to probe the diversion of funds meant for the procurement of arms to fight the insurgency. All these suggest that the insurgency in the North-east is a major priority of this government.
“I am a father and I can imagine what it means to have my children kept in captivity in a forest and the president feels the same way. So he has not given up the girls,” the minister said.
Meanwhile, the price of crude oil rose yesterday following reports that Russia and OPEC may resume dialogue on a production cap.
The Wall Street Journal (WSJ) reported that the global oil benchmark Brent crude rose 0.9 per cent to $47.38 a barrel on London’s Intercontinental Exchange (ICE) futures exchange. It however traded on the New York Mercantile Exchange, West Texas Intermediate futures at $44.86 a barrel, up 0.8 per cent.
Both the WSJ and UK’s Telegraph reported that the price movements were triggered by comments made by Saudi Arabia’s Energy Minister, Khalid al-Falih and Russian Energy Minister, Alexander Novak that market action was likely if discussions at an upcoming meeting in Algeria between OPEC and its other ally producers go well.
According to WSJ, prices have gained since Saudi’s al-Falih signalled last week that his country was open to measures to stabilise the market which has been struggling with oversupply for the past two years.
Saudi is the biggest producer among members of OPEC and historically seen as the de facto leader of the oil cartel. The OPEC meeting in Algeria is scheduled as an informal gathering in September.
The Telegraph also reported that the price movement was in reaction to the OPEC Algeria meeting where the focus is expected to return to a possible supply cap deal after similar talks in Doha failed earlier this year.
Novak confirmed Russia’s participation at the Algeria meeting to Saudi newspaper, Asharq al-Awsat. Novak stated that his country – the world’s third largest supplier of oil – was also involved in early discussions.
He said: “We are co-operating in the framework of consultations regarding the oil market with OPEC countries and producers from outside the organisation, and are determined to continue dialogue to achieve market stability.”
At the weekend, al-Falih told the Saudi Press Agency that “we are going to have a ministerial meeting of IEF in Algeria next month, and there is an opportunity for OPEC and major exporting non-OPEC ministers to meet and discuss the market situation, including any possible action that may be required to stabilise the market”.
He added: “We’ve said before that market rebalancing is already taking place but the process of clearing crude and product inventories will take time. We are on the right track and prices should reflect that.”
Oil price recovery from a 12-year low of $28 a barrel in January had floundered last month when global economic fears reignited concern that there was a glut in the market, causing prices to slump back to $41.66 a barrel.
Oil Slips With Energy Prices in Europe Halts Record Rally
Oil dipped toward $72 a barrel in New York after prices of energy commodities in Europe halted a record-breaking run.
West Texas Intermediate futures fell 0.6%, having reached the highest intraday level since early August on Wednesday. A rally in European gas and power prices to unprecedented levels was set to end as industries were starting to curb consumption. The surge in energy rates could temporarily boost diesel demand by as much as 2 million barrels a day as consumers switch fuels, according to Citigroup Inc.
Still, the bullish signals for oil are continuing to increase. U.S. crude inventories dropped by more than 6 million barrels last week to a two-year low, according to government figures, as coronavirus vaccination programs permit economies to reopen. Chevron Corp. Chief Executive Officer Mike Wirth warned that the world is facing high energy prices for the foreseeable future.
The investor optimism is showing up in key oil time spreads widening. Trading of bullish Brent options also surged to a two-month high on Wednesday.
Prices have been pushed higher in recent days “by supply outages combined with expectations of switching from gas to oil in the power sector,” said Helge Andre Martinsen, a senior oil market analyst at DNB Bank ASA. “We still believe in softer prices toward year-end and early next year as curtailed production returns and OPEC+ continues to increase production.”
Strong prices for gas, liquefied natural gas and oil are expected to last “for a while” as producers resist the urge to drill again, Chevron’s Wirth told Bloomberg News. Norway’s Equinor ASA said Thursday it also expects European gas prices to remain high over winter.
Fuel Scarcity: Petrol Sells N220 Per Litre in Nsukka
Premium Motor Spirit, otherwise called petrol, now sells for between N200 and N220 per liter at the independent marketers’ service stations in Nsukka, Enugu State.
The News Agency of Nigeria is reporting the hike in the price against the official pump price of N162 per liter.
It said it started about a fortnight ago due to the scarcity of the commodity in the town and its environs.
Some residents of the town expressed deep worry over the development in separate interviews with NAN on Wednesday.
A civil servant, Stephen Ozioko, said the situation had further compounded the economic difficulties in the area.
Ozioko said many private car owners had been compelled to park their vehicles at home and move around in public transport.
He said: “Since the scarcity started, I decided to park my car and take public transport to the office and back home. N220 per liter is exorbitant and I cannot afford it considering my salary as a civil servant. I shall continue to use public transport until the situation returns to normal.”
A building material dealer, Timothy Ngwu, said the development had also led to an increase in transport fare in the area.
Ngwu said: “Some people now trek from Nsukka Old Park to Odenigbo Roundabout because of the 100 percent hike in fares from N50 to N100 by tricycle.
“Before now, transport fare from Nsukka to Enugu was N500, but transporters now charge between N800 and N1000.”
Also, a commuter bus driver, Victor Ogbonna, described the scarcity and hike in the price of petrol as “unfortunate and an ugly development”.
Ogbonna added: “Today, only a few filling stations are selling the commodity in Nsukka town, while others are shut.”
He alleged that some filling stations, which claimed to be out-of-stock, were selling to black marketers at night.
He said: “This is why black marketers have sprung up everywhere in the town, selling the commodity for about N300 per liter.”
NAN reports that virtually all the major marketers in the area have stopped the sale of petrol, claiming to be out-of-stock.
The people called on the government to urgently intervene in order to bring the situation under control and also put an end to its harsh economic effects on the messes.
DPR Targets N3.2T Revenue by Year-End
Nigeria’s Department of Petroleum Resources (DPR) will hit the N3.2 trillion revenue target by December 2021, according to its Director/ Chief Executive Officer, Mr Sarki Auwalu.
Auwalu made the disclosure when he led a delegation of the DPR management team to the Executive Secretary of Petroleum Technology Development Fund (PTDF), Mr Bello Gusau, in Abuja on Wednesday.
He said that 70 percent of the revenue projection had already been met. “Last year, we exceed our revenue budget. We were given N1.5 trillion but we were able to generate N2.7trillion.
“This year, our revenue budget was N3.2 trillion. By the end of August 2021, we have generated up to 70 per cent.
“So, we with September, October, November and December, it is only the 30 per cent that we will work over,’’ he said
He noted that the government took advantage of fiscal terms within the old and new legislation, thereby creating a level of increased signature bonuses.
“We reorganise the work programme that is normally being done in the DPR to key into the new operational structure as we see it in the bill, now an act.
“That programme is being handled by the planning and strategic business unit as against what we use to have because the entire work programme is supposed to show not only technical but also commercial and viability of oil fields and to guarantee the return on investment for investors.
“We have also created an economic value and benchmarking unit to key into the new fiscal provisions of the PIA,’’ he said.
Commenting on capacity, Auwalu said the country stands at the advantage of exporting skills to emerging oil and gas countries across Africa with proper implementation of the newly passed Petroleum Industry Act.
This, he said, the DPR was ready to partner with the Fund to continue to build capacity in the oil and gas sector
He noted that the Federal Government was determined to create leeway that would encourage investors and drastically improve the nation’s petroleum industry.
He further noted that no fewer than 300 legal battles in the oil and gas industry in Nigeria, which had been stalled for the past 20 years in courts, had been resolved through alternative dispute resolution.
According to Auwalu, the DPR is strategising well to ensure effective implementation of the PIA.
Responding, Gusau commended the DPR for enabling the industry and enhancing business activities in the oil and gas sector.
He said that DPR remained the head of the oil and gas industry in Nigeria adding that the Fund was grateful to benefit from the wealth of ideas from DPR.
“The last time we visited, we had a good discussion and issues raised are being implemented like tracking the inflow of funds in signature bonus accounts.
“We extended the meeting and involved ministry of Finance, Accountant General office and even the Central Bank of Nigeria (CBN).
“Sitting at field development plans and attending significant meetings, helped us to know where and what the industry is trying to do and it also helps to inform our decisions in training and capacity plans,’’ he said
He urged the DPR to continue on its effort to ensure an efficient and productive petroleum industry in Nigeria
He assured collaboration with all as the head of the implementation committee of the Petroleum Industry Act. (NAN)
CBN Goes After Abokifx, Freezes Bank Accounts for Publishing Black Market Rates
Union Bank Announces the Appointment of Aisha Abubakar as Independent Non-Executive Director
Releaf Secures $4.2M in Seed Funding Plans To Drive Industrialisation of Food Processing in Africa
Government4 weeks ago
Buhari Approves Review of 368 Grazing Reserves in 25 States
Naira2 weeks ago
Naira Plunges Further, Exchanges at N530 to U.S Dollar
News2 weeks ago
Buhari Terminates Appointment of Power and Agriculture Ministers
Economy3 weeks ago
Nigeria Economy Grows 5% In Second Quarter, Its Third Consecutive Growth
Energy3 weeks ago
NNPC Made A Net Profit of N287B in 2020 – Buhari
Government3 weeks ago
Hakainde Hichilema Sworn In As Zambia President
Banking Sector3 weeks ago
Zenith Bank Launches Intelligent Chatbot, ZiVA
Economy4 weeks ago
Nigeria Lost $50B To Delayed Passage Of Petroleum Industry Act – Buhari