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Shipowners Pay More on Nigerian Waters

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Shipowners

Tankers moving through the Gulf of Guinea in West Africa are paying additional insurance premiums, compared with relatively safe sea lanes, due to escalation of piracy incidents and sea robberies in Nigeria and others.

Additional premiums have to be paid by shipowners if their ships move through, load or discharge cargoes from this region, Intertanko’s London-based Marine Director, Phillip Belcher, was quoted by Platts to have said on the sidelines of the International ‘Safety at Sea’ conference in Singapore.

According to him, these premiums have to be paid because Nigeria and a major chunk of the Gulf of Guinea are among the listed areas — for hull war, piracy, terrorism and related perils — of the Joint War Committee of the Lloyd’s Markets Association, which comprises  underwriting representatives.

Pirate attacks off the coast of Nigeria rose in the first half of the year, while attacks on shipping globally fell to their lowest level for 21 years, according to the International Chamber of Commerce’s International Maritime Bureau.

Nigerian pirates kidnapped 24 crew members in the first half of this year, up from just 10 in the first six months of 2015, the IMB said.

It said these incidents were “increasingly violent”, with Nigerians accounting for eight of the nine incidents worldwide in which ships were fired on in the January-June period.

Belcher said all shipowners whose vessels were passing through the Gulf of Guinea had to notify the insurer of the measures being taken to mitigate the risk and accordingly the premiums are finalised on a case by case basis.

Nigeria’s problems are not restricted to piracy and offshore robberies alone.

According to market sources, West African crude loading has taken a severe beating due to the unrest in Nigeria.

A few weeks ago, Shell’s Nigerian unit declared force majeure for Bonny Light crude liftings. A month earlier, the company ended its force majeure due to another leak on the same pipeline.

Nigeria’s crude output is at its lowest levels in 30 years. Forcados, Brass River and Qua Iboe grades have all been impacted by dreaded attacks and sabotage by terrorists, according to shipping industry officials and analysts. Compared with the beginning of the year, crude loadings in Nigeria are down by 500,000 barrels per day, they said.

Theoretically, this translates into disappearance of demand for one Suezmax every two days or 15 Suezmaxes a month, they added.

A Suezmax typically carries one million barrels of crude and is a popular mode for transporting cargoes from West Africa.

“We are closely monitoring the situation and will be very concerned if current criminal activities [around Nigeria] become a political football,” said Belcher.

A few years ago when piracy in the Gulf of Aden was at its peak, strategic experts had expressed similar concerns over potential linkages with Islamist terrorism in Somalia, though eventually no such major nexus was unravelled.

“Governments [in the region] should take all measures to provide security to ships moving in the region and if they can’t, they should allow private agencies to do so,” he said.

At least two or three protected anchorages have been set up close to the ports in the Gulf of Guinea where ships are provided security by private armed guards, Belcher said.

Countries along the Gulf of Guinea do not permit private armed guards from outside on board the ships when they are in their territorial waters.

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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