- Fuel Imports’ll Reduce by 60% in 2018
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said that the reforms embarked upon by the government are targeted at cutting petroleum products’ importation by at least 60 per cent by 2018 and thereafter position the country for net export by 2019.
The minister, who said this in Lagos on Monday at the 10th Oil Trading and Logistics Africa Downstream Expo, stressed the need to fully liberalise and deregulate the midstream and downstream sub-sectors such that the open market prices of petroleum products would be cost-reflective and market-driven.
Represented by his Senior Technical Adviser on Upstream and Gas, Mr. Gbite Adeniji, the minister highlighted the need to build refineries and run them as profit centres that would purchase crude at international prices and deliver products at export parity prices, saying, “This is the only viable basis for financing new infrastructure.
“Perhaps, the most important part of reforms in the midstream and downstream sub-sectors is creating a profitable products-to-market system for Nigeria and removing hindrances and bottlenecks through incentives and regulatory frameworks.”
According to Kachikwu, a key priority area in the road map for the oil industry is increase in local refining production capacity through the implementation of modular refineries and co-location.
He said the target “is to ensure that petroleum products importation is reduced by at least 60 per cent by 2018, and thereafter position Nigeria for net export by 2019.”
He stressed the need for a strong independent regulator to superintend activities in the sub-sector, “whose role is not price-setting but to develop and enforce open, fair and transparent rules in the downstream oil and gas sector.”
He added, “This ensures that pricing will be conducted on a market-derived basis. We need to establish an oil and gas infrastructure protection squad, with the responsibility for dealing with crude and products theft, vandalism and general criminality, which is currently on an upsurge in the entire industry.”
The Group General Manager, Crude Oil Marketing Division, Nigerian National Petroleum Corporation, Mr. Mele Kyari, said the government had resolved the challenge of foreign exchange availability facing marketers, but noted that some of them were rejecting the dollar supply provided by the government to facilitate the importation of the products.
He, however, said, “There is no way today you can take petrol to the retail outlets and sell it at N145. So, if that is true, and I believe that is true because we all go to the market and we know what is going on, why can’t we sell above N145?
“And I know today that it is impossible to announce tomorrow that petrol price is N150. This government cannot sustain it. It is unfair even to expect it to do that today. That is the truth. But all of us, including myself, are not ready to take that number. That is why Vitol, Northwest, Petrocam, and others, are not importing; it is not forex.”
Kyari said the government has created a niche market for forex, explaining thus, “We have ring-fenced all forex from the upstream such that those forex will be available at a fixed price; a price that the CBN has agreed. I am part of the people who are involved in making sure that the forex is available.
“I am part of the committee allocating those forex, and I know and I can see some of you here; we gave you forex, but you returned it. And the reason that was given was that the forex was not enough to import. But that is not the truth. The truth is that if you go to the market today and buy products and land here, you are required to sell it at N145 maximum. That is the main reason why people are not importing.
“As I speak to you today, we have stranded forex that nobody is ready to pick up. So, we have closed the chapter on forex.”
Kyari, however, said the NNPC was very comfortable and could sell petrol at N145 per litre.
He said, “We saw the challenges coming and we decided to take a very competitive and a long position in the market, meaning that we planned ahead. So, that is why our product is selling at N145 and below.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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