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FG Urged to Fine-tune FX Administration for Petrol Imports

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Forex Weekly Outlook November 7-11
  • FG Urged to Fine-tune FX Administration for Petrol Imports

A former Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Mr. Reginald Stanley has said that the federal government’s foreign exchange facility for importation of petrol into the country was a good intervention in the downstream petroleum sector, but that its administration should be fine-tuned.

Speaking when he commissioned the new mega petrol service station built by Emadeb Energy Services in Abuja, Stanley advised that the government clear out certain administrative bottlenecks in providing forex to marketers. He said those bottlenecks were preventing its liberalisation of the sector from taking a full course.

According to him, when forex approved for marketers are delayed from getting to their banks to enable them open letters of credit for orders placed, the volatility associated with petrol importation will eventually affect the tonnage imported by marketers.

“The FX challenges are national whether you are manufacturing or importing, but the government has done very well by providing intervention forex for the downstream to make sure that it keeps running.

“The only little lacuna here is that the forex needs to be made to work. There is a little bit of administrative bottlenecks here and there that need to be untangled and as soon as you do that, it will work well. The intervention is great but the application has to be fine-tuned,” said Stanley.

“The way the forex is being given today, there is a timing issue. If you are given forex on a Monday and the price of PMS is $450 per tonne but that forex does not get into your account for letter of credits to be opened until Friday, it means there is a time difference of four days and unfortunately there is volatility in the market place because by Friday the price would have moved up to $500 and marketers will bring less quantity. That underpins why a good number of marketers are unable to import petrol.”

He said the opportunities in the country’s downstream petroleum sector has continued to grow, adding that investments have being upgraded to include mega, multifunctional service stations like that of Emadeb.

“This is not just a filling station but a mega station which is what I have always advocated. This is an integral part of the downstream development in Nigeria. We have had a proliferation of filling stations littered all over the place but abandoned.

“Mega filling stations are the roadmap to the future. For Emadeb, this is a very good move that comes at a very critical time when depots are gone and products are taken to the consumers with efficiency,” he stated.

He stated that the federal government’s decision to liberalise and put pump prices within N135 to N145 have engendered competition in the market and that operators would now have to be efficient to remain in business.

Speaking on the new outlet, the Managing Director of Emadeb Energy, Adebowale Olujimi said his firm was already building 10 of such new outlets across the country, with further plans to acquire some existing stations within the next 18 to 24 months.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

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Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site

Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.

Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.

A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.

One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.

However, Saudi authorities are yet to confirm or respond to the story.

 

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Crude Oil

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Crude oil

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.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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opec

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.”

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