Two months after force majeure was declared on exports of Qua Iboe, the nation’s largest crude oil stream, ExxonMobil is offering a cargo of the grade to be loaded next month.
This is coming as the first offer since Mobil Producing Nigeria, a subsidiary of ExxonMobil, declared force majeure on the grade in July, sources told Reuters on Tuesday.
Force majeure is a legal clause that allows companies to cancel or delay deliveries due to unforeseen circumstances.
ExxonMobil declared force majeure on the grade in mid-July after a leak on the pipeline that feeds the oil to the export terminal.
Militant group, the Niger Delta Avengers, had said in July that it blew up the oil giant’s 48-inch crude export pipeline in Akwa Ibom State that feeds the Qua Iboe Terminal, which has capacity to export more than 300,000 barrels per day.
It was not immediately clear if the pipeline was already repaired, or if the company simply expected it to be back online in time to load the oil in October.
The cargo is offered for October 8-16 loading at a premium of $1.80 per barrel to dated Brent, sources said.
A spokesman for ExxonMobil said the force majeure remained in effect but did not give a time frame for the resumption of regular oil flows.
The Manager, Media and Communications, Mobil Producing Nigeria Unlimited, Mr. Oge Udeagha, had in July told our correspondent that the force majeure was declared due to a system anomaly observed during a routine check of the firm’s loading facility on July 14, 2016.
“We are working to ensure loading activities at the facility return to normal. The Qua Iboe Terminal is operating and production activities continue,” he had said.
Nigeria has struggled to maintain its crude oil production following a spate of militant attacks and technical problems that in May pushed production briefly to 30-year lows.
The country may be through the worst of the disruptions from militant attacks and other incidents that affected almost half its oil production last month, according to Bloomberg.
The volume of crude supplies subject to force majeure is diminishing after reaching almost 900,000 barrels per day last month.
Royal Dutch Shell Plc lifted the force majeure on Bonny Light crude last week and the Forcados grade, which had been offline since February, is expected to follow by the middle of the month.
Global oil benchmark, Brent, fell by three per cent or $1.07 on Tuesday to $47.25 per barrel after both the world’s consumers and producers revised forecasts that signalled the global crude glut persisting for much longer than previously expected.
The International Energy Agency, which advises oil-consuming countries on their energy policies, said a sharp slowdown in oil demand growth, coupled with ballooning inventories and rising supply, meant that the market would be oversupplied at least through the first half of 2017.
No Plan to Increase Fuel Price; Says FG
The Federal Government has stated that it has no plan to increase fuel price during the yuletide period.
This assurance is coming amid the nationwide fuel scarcity which has pushed the price of petrol above N250 in many retail stations.
Investors King learnt that fuel is being held for N250 per litre in Abuja and several other cities across the country while black marketers are charging between N400 and N450 per litre.
The scarcity and the high price of fuel are however becoming unbearable for many Nigerians, especially those who have reasons to embark on business travel for the December festivals.
According to the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Ukadike Chinedu, most of the association members, who owned the bulk of the filling stations across the country, were now subjected to purchasing PMS at about N220/litre, which was why many outlets currently dispensed at about N250/litre and above.
He noted that the cost of the commodity has been on the rise due to its unavailability and other concerns in the sector.
He added that the price of fuel could be sold from N350/litre to N400/litre before the end of the year.
Meanwhile, a number of senior officials at the NNPC had stated that the subsidy was becoming too burdensome on the national oil company, as this was another reason for the scarcity of PMS.
According to a source who is familiar with the development as reported by Punch News, “How can we continue to import 60 million litres of petrol daily and keep subsidising it, while millions of litres are either diverted or cannot be accounted for? The burden is too much, as you rightly captured in that story”.
Investors King understands that NNPC is the sole importer of petroleum into the country and it pays billions of naira every month to subsidise the product to N147 per litre.
Reuters News reported that in August 2022, NNPC paid more than $1 billion as fuel subsidy while the federal government earmarked N3.6 trillion as fuel subsidy in the 2023 budget proposal.
Fuel Scarcity: NNPC Declares 2billion Liters in Stock, Blames Scarcity on Road Construction
NNPC Claimed it as 2 billion litres of fuel despite scarcity
The Nigerian National Petroleum Company (NNPC) has blamed the recent fuel scarcity on road construction around Apapa, noting that the corporation has about 2 billion litres of fuel in stock.
According to a statement issued by NNPC Executive Vice President, Downstream, Mr Adeyemi Adetunji, the Nigeria National Petroleum Company has about 2 billion litres of fuel which can last the country conveniently for more than 30 days.
The Executive Vice President further blamed the queues on the road construction around Apapa axis which has slowed down the movement of oil trucks to several parts of the country.
“The recent queues in Lagos are largely due to ongoing road infrastructure projects around Apapa and access road challenges in Lagos” he said.
He however noted that more filling stations should have Premium Motor Spirit (PMS) otherwise known as petrol with the ease in gridlock along the apapa axis.
“The gridlock is easing out and NNPC Ltd has programmed vessels and trucks to unconstrained depots and massive load outs from depots to states are closely monitored,” he said.
Investors King gathered that several states including Abuja have been impacted by the supply chain difficulty caused by the construction around Apapa.
The scarcity of fuel has therefore led to the hike in price. In most places across the country, fuel is sold as high as N250 per litre. Several fuel stations are already taking advantage of the situation coupled with the increase in the movement of people and goods owing to the December festivals.
Speaking further, Adeyemi noted that the situation will soon be back to normalcy as NNPC is taking measures to address the situation.
“We want to reassure Nigerians that NNPC has sufficient products and we significantly increased product loading in selected depots and extended hours at strategic stations to ensure sufficiency nationwide.
“We are also working with industry stakeholders to ensure normalcy is returned as soon as possible,” he concluded.
Global Growth to Drop Below 2% in 2023, Says Citi
Citigroup on Wednesday forecast global growth to slow to below 2% next year, echoing similar projections by major financial institutions such as Goldman Sachs, Barclays, and J.P. Morgan.
Strategists at the brokerage cited continued challenges from the COVID-19 pandemic and the Russia-Ukraine war — which skyrocketed inflation to decades-high levels and triggered aggressive policy tightening — as reasons behind the outlook.
“We see global performance as likely (being) plagued by ‘rolling’ country-level recessions through the year ahead,” said Citi strategists, led by Nathan Sheets.
While the Wall-Street investment bank expects the U.S. economy to grow 1.9% this year, it is seen more than halving to 0.7% in 2023.
It expects year-on-year U.S. inflation at 4.8% next year, with the U.S. Federal Reserve’s terminal rate seen between 5.25% and 5.5%.
Among other geographies, Citi sees the UK and euro area falling into recession by the end of this year, as both economies face the heat of energy constraints on supply and demand front, along with tighter monetary and fiscal policies.
For 2023, Citi projects UK and euro area to contract 1.5% and 0.4%, respectively.
In China, the brokerage expects the government to soften its zero-COVID policy, which is seen driving a 5.6% growth in gross domestic product next year.
Emerging markets, meanwhile, are seen growing 3.7%, with India’s 5.7% growth — slower than this year’s 6.7% prediction — seen leading among major economies.
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