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World Bank Approves 8 Erosion Sites in Anambra for NEWMAP

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World Bank

The World Bank Group has approved eight more erosion sites in Anambra State for construction and remedial measures for the Nigeria Erosion and Watershed Management Project (NEWMAP).

The World Bank Environmental Specialist and its Task Team Leader in Nigeria, Dr. Amos Abu disclosed this on Friday shortly after inspecting the ongoing construction work at some erosion sites in the state.

While briefing the state Governor, Willie Obiano who was represented by his deputy, Dr. Nkem Okeke, at Best Western Meloch Hotels, Awka, Abu noted that the World Bank through the NEWMAP was making spirited efforts to end the scourge of erosion in Nigeria.

“This is a joint World Bank, FAO, and Federal Government of Nigeria implementation and technical support mission; the states that are implementing the Nigeria Erosion and Watershed Management Project (NEWMAP).

“This is a project that started with seven states but as of today, it has been oversubscribed such that we have 19 states and we had to dialogue with the federal government to put moratorium until the next midterm review. By then we will be able to take stock and determine whether we will be able to add one additional state.

“When NEWMAP was conceived, in particular during the preparation, Anambra State was the lead state; it was setting the pace but along the line something happened. It appeared to have lost that lead role but we are very happy to report that the momentum is back.

“As at the last count, we promised His Excellency that the design of the priority site as identified by the state remains a priority for us in terms of our reviewing. And with this we have given it accelerated review process. And we are happy to report that as at today eight priority sites designs have been approved for Anambra State.

“Not just that, we are also happy to report that the bidding document for each site has also been given review by the World Bank and as of today, four of these sites, their bidding documents are ready for implementation. So we are very happy for the significant progress we have recorded in Anambra with the support, the zeal and the interest of His Excellency, and the entire members of his cabinet”, he explained.

Responding, Dr. Okeke, regretted that erosion had reduced the size of the state such that it was now the smallest state in the federation. He pointed out that the state government would provide every needed support to ensure that the team succeeds in their good mission in the state.

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

Nigerian Oil Loses Ground to Cheaper US and Russian Crude

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Crude oil

Nigeria’s once-thriving oil industry is facing a significant challenge as traditional buyers increasingly turn to more affordable alternatives from the United States and Russia.

This shift has led to France emerging as the leading buyer of Nigerian crude, marking a significant change in the global oil market dynamics.

Top Nigerian crude grades like Bonny Light, Forcados, and Brass have long been favored by refineries in Europe and Asia due to their low sulfur content.

However, the country’s primary customers, including India and China, are now opting for cheaper US and Russian oil.

This trend poses a substantial risk to Nigeria, which relies on oil exports for more than half of its foreign exchange earnings.

Data from BusinessDay reveals a stark decline in India’s purchase of Nigerian crude. In the first quarter of 2024, India bought N1.3 trillion worth of Nigerian oil, a significant drop from the average of N2 trillion purchased between 2018 and 2021.

“Buyers are increasingly turning to cheaper alternatives, raising concerns for the country’s revenue stream,” said Aisha Mohammed, a senior energy analyst at the Lagos-based Centre for Development Studies.

The latest tanker-tracking data monitored by Bloomberg indicates that India is buying more American crude oil as Russian energy flows dwindle amid sanctions.

India’s state-owned oil refiners and leading private companies have increased their imports of US crude, reaching nearly seven million barrels of April-loading US oil. This shift is the largest monthly inflow since last May.

Russian crude flows to India surged following the invasion of Ukraine, making Russia the biggest supplier to the South Asian nation.

However, tighter US sanctions have stranded Russian cargoes, narrowing discounts, and prompting India to ramp up purchases from Saudi Arabia.

“Given the issues faced with importing Sokol in Russia, it’s no surprise that Indian refineries are turning toward US WTI Midland as their light-sweet alternative,” explained Dylan Sim, an analyst at industry consultant FGE.

As a result, France has overtaken the Netherlands to become the biggest buyer of Nigerian crude oil, purchasing products worth N2.5 trillion in the first quarter of 2024.

Spain and India occupied second and fourth positions, with imports valued at N1.72 trillion and N1.3 trillion respectively, as of March 2024.

The sluggish pace of sales for Nigeria’s May supplies highlights the market’s shifting dynamics. Findings show that about 10 cargoes of Nigerian crude for May loading were still available for purchase, indicating a reduced demand.

Rival suppliers such as Azeri Light and West Texas Intermediate have also seen price weaknesses, impacting Nigerian crude demand.

“We’ve got much weaker margins, so Nigeria’s crude demand is taking a hit,” noted James Davis, director of short-term oil market research at FGE.

Sellers seeking premiums over the Dated Brent benchmark have found the European market less receptive, according to Energy Aspects Ltd.

“May cargoes were at a premium that didn’t work that well into Europe, but lower offers have seen volumes move,” said Christopher Haines, EA global crude analyst. “Stronger forward diesel pricing is also helping.”

Some Nigerian grades are being priced more competitively, including Qua Iboe to Asia and Bonny Light to the Mediterranean or East, with the overhang slowly reducing, according to Sparta Commodities.

However, the overall reduced demand could lead to a decrease in revenue from oil exports, a major source of income for the Nigerian government.

“Reduced demand could lead to a decrease in revenue from oil exports, a major source of income for the Nigerian government,” warned Charles Ogbeide, an energy analyst with a Lagos-based investment bank.

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Commodities

Refiners Predict Petrol Prices to Fall to N300/Litre with Adequate Local Crude Supply

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Petrol - Investors King

The pump price of Premium Motor Spirit (PMS), commonly known as petrol, could drop to N300 per litre once local production ramps up significantly, according to operators of modular refineries.

This projection hinges on the provision of sufficient crude oil to domestic refiners, which they say would undercut the exorbitant costs currently imposed by foreign refineries.

Speaking under the aegis of the Crude Oil Refinery Owners Association of Nigeria (CORAN), the refiners stressed the urgency for the government to ensure a steady supply of crude oil to local processing plants.

They argue that the reliance on imported petroleum products has been economically disadvantageous for Nigeria.

Eche Idoko, Publicity Secretary of CORAN, emphasized that the current high costs could be mitigated by boosting local production.

“If we begin to produce PMS in large volumes and ensure adequate crude oil supply, the pump price could be reduced to N300 per litre. This would prevent Nigerians from paying nearly N700 per litre and stop foreign refiners from profiting excessively at our expense,” Idoko stated.

The potential price drop follows the model seen with diesel, which experienced a significant price reduction once the Dangote Petroleum Refinery began its production.

“Diesel prices dropped from N1,700-N1,800 per litre to N1,200 per litre after Dangote started producing. This is a clear indication that local production can drastically reduce costs,” Idoko explained.

In a previous statement, Africa’s richest man, Aliko Dangote, affirmed that Nigeria would cease importing petrol by June 2024 due to the Dangote Refinery’s capacity to meet local demand.

Dangote also expressed confidence in the refinery’s ability to cater to West Africa’s diesel and aviation fuel needs.

Challenges and Governmental Role

However, achieving this price reduction is contingent on several factors, including the provision of crude oil at the naira equivalent of its dollar rate.

CORAN has advocated for this approach, citing that it would bolster the naira and reduce the financial burden on refiners who currently buy crude in dollars.

The Nigerian government has shown some commitment towards this goal. Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), confirmed that a framework has been developed to ensure consistent supply of crude oil to domestic refineries.

“We have created a template for the Domestic Crude Oil Supply Obligation to foster seamless supply to local refineries,” Komolafe stated.

Industry Reactions

Oil marketers have welcomed the potential for reduced petrol prices. Abubakar Maigandi, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), expressed optimism about the Dangote Refinery’s impact on petrol prices.

“We expect the price of locally produced PMS to be below the current NNPC rate of N565.50 per litre. Ideally, we are looking at a price around N500 per litre,” Maigandi noted.

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Crude Oil

Brent Nears $80, WTI at $76 After Weekly Drop and OPEC+ Supply Move

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Brent crude oil - Investors King

Oil prices steadied on Monday with Brent crude trading near $80 per barrel and West Texas Intermediate (WTI) hovering around $76.

This stabilization follows a 2.5% decline last week, spurred by OPEC+’s announcement to increase supply starting from the third quarter.

The market is now keenly awaiting a series of industry reports and a crucial decision from the Federal Reserve on interest rates.

Last week’s drop in oil prices was exacerbated by algorithmic trading, which intensified the market’s reaction to OPEC+’s decision.

The alliance’s move to restore supply comes after months of production cuts aimed at stabilizing prices amid fluctuating demand.

Traders are now looking ahead to monthly reports from OPEC and the International Energy Agency (IEA), scheduled for Tuesday and Wednesday, respectively.

These reports are expected to provide valuable insights into the current health and future outlook of the oil sector.

Also, the Federal Reserve’s mid-week announcement on interest rates is being closely watched.

Strong economic data and persistently high inflation have tempered expectations that the Fed will soon pivot to lower borrowing costs, a shift that could significantly impact market dynamics.

The oil market has been on a downward trend since early April, driven by a weakening demand outlook.

This bearish sentiment is reflected in the positioning of money managers, who have significantly reduced their net long positions on Brent crude to the least bullish levels in a decade, according to data going back to 2011. Similarly, net long positions for the US benchmark WTI have also declined.

Despite the overall downturn, certain segments of the refined products market, such as jet fuel, are showing signs of strength.

A resurgence in air travel, approaching pre-COVID-19 levels, is driving increased demand for jet fuel, offering a glimmer of optimism within the broader market.

Geopolitical factors continue to play a role in the oil market’s volatility. Tensions remain high in the Middle East, where an Israeli operation in Gaza resulted in the release of four hostages but also led to the deaths of over 200 Palestinians, according to the Hamas-run government media office.

Meanwhile, in Europe, far-right parties made significant gains in the European Parliament elections, adding another layer of uncertainty to the geopolitical landscape.

Trading volumes are expected to be thin during Asian hours due to holidays in mainland China and Hong Kong, which could contribute to lower liquidity and potential price swings.

As the market navigates these multifaceted challenges, the upcoming reports from OPEC and the IEA, along with the Federal Reserve’s decision, will be pivotal in shaping the near-term outlook for oil prices.

For now, traders and analysts alike will be watching closely to gauge the future direction of the market.

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