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Opportunities in Oil Sector’ll be Over Soon — Osinbajo

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Vice President Yemi Osinbajo
  • Opportunities in Oil Sector’ll be Over Soon

Vice President Yemi Osinbajo on Monday stated that opportunities in the petroleum industry were narrowing and might be over sooner than expected as a result of the increasing breakthroughs in renewable energy use as well as the expansion in the patronage of electric vehicles globally.

According to him, although Nigeria needs oil as it works towards diversifying its economy, the party may soon be over in the petroleum industry.

Speaking as a special guest at the presentation of three books written by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, in Abuja, the vice president explained that it was becoming increasingly important for the country to diversify its economy.

Osinbajo said, “As we move to diversify our economy, we are particularly aware that we need oil to get out of oil, yet our window of opportunity to benefit maximally from the petroleum industry is narrowing.

“The development of shale oil, which the author spent considerable time on, the increasing breakthroughs in renewable energy use, the speed of expansion in the use of electric vehicles –Japan now has more electric charging stations than gas stations – all point to the fact that the party may be over sooner than we expected.”

He stated that the minister had delivered what could be described as probably the most significant contributions to help understand the country’s petroleum sector.

Osinbajo said, “You will not find the insights that Kachikwu offers in the chapters on marketing and transportation of petroleum products, divestment, negative trend in the Nigerian petroleum industry and ministerial discretion in any textbook or policy manual on the subject.

“Kachikwu clearly took full advantage of the mere convergence of scholarship, contemporary experience and policy wisdom to deliver what are probably today the most significant contributions to our understanding of the major issues of the Nigerian petroleum industry.”

The three books unveiled at the event were ‘Compendium of Oil and Gas Cases in Nigeria’, ‘Legal Issues in the Nigerian Petroleum Industry’, and ‘The Petroleum Industry Bill: Getting to the Yes’.

Kachikwu told journalists that although the contents of the books were his professional and privileged thoughts, it would be helpful if the federal and state governments, the National Assembly and stakeholders in the industry took the issues raised into consideration.

He said, “Obviously, we looked at the historical issues of the PIB as well as the current ones. A lot of what have been done were captured, and also a lot of those things that they’ve not done in the fiscal areas were captured too, because the fiscal area is key. But there is a lot of room for thoughts and the objective of getting to yes with the PIB is to get to yes.

“The book on the PIB looked at what are the challenging issues that have stopped the bill from being passed, what is the politics in it, and also stepping away from the politics, it looked at the core critical areas that are essential if we want to succeed in it. So, there’s going to be a lot of room for dialogue with the National Assembly.

“What I’ve provided are my thoughts and are guiding thoughts, which I think can help in moving the industry forward. I wrote as a Nigerian privileged to have some of the information and access to data that I have and I think that a lot of the things I say, if taken into consideration by the government, will help solve a lot of problems.”

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

Oil Posts 2% Gain for the Week Despite India Virus Surge

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Crude Oil - Investors King

Oil prices steadied on Friday and were set for a weekly gain against the backdrop of optimism over a global economic recovery, though the COVID-19 crisis in India capped prices.

Brent crude futures settled 0.28% higher at $68.28 per barrel and U.S. West Texas Intermediate (WTI) crude advanced 0.29% to $64.90 per barrel.

Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.

In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity.

However, crude imports by the world’s biggest buyer fell 0.2% in April from a year earlier to 40.36 million tonnes, or 9.82 million barrels per day (bpd), the lowest since December.

In the United States, the world’s largest oil consumer, jobless claims have dropped, signalling the labour market recovery has entered a new phase as the economy recovers.

The recovery in oil demand, however, has been uneven as surging COVID-19 cases in India reduce fuel consumption in the world’s third-largest oil importer and consumer.

“Brent came within a whisker of breaking past $70 a barrel this week but failed at the final hurdle as demand uncertainty dragged on prices,” said Stephen Brennock at oil brokerage PVM.

The resurgence of COVID-19 in countries such as India, Japan and Thailand is hindering gasoline demand recovery, energy consultancy FGE said in a client note, though some of the lost demand has been offset by countries such as China, where recent Labour Day holiday travel surpassed 2019 levels.

“Gasoline demand in the U.S. and parts of Europe is faring relatively well,” FGE said.

“Further out, we could see demand pick up as lockdowns are eased and pent-up demand is released during the summer driving season.”

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Commodities

Lagos Commodities and Futures Exchange to Commence Gold Trading

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gold bars

With the admission of Dukia Gold’s diversified financial instruments backed by gold as the underlying asset, Lagos Commodities and Futures Exchange is set to commence gold trading.

According to Dukia Gold, the instruments will be in form of exchange-traded notes, commercial papers and other gold-backed securities, adding that it will enable the company to deepen the commodities market in Nigeria, increase capacity, generate foreign exchange for the Nigerian government to better diversify foreign reserves and create jobs across the metal production value chain.

Tunde Fagbemi, the Chairman, Dukia Gold, disclosed this while addressing journalists at Pre-Listing Media Interactive Session in Lagos on Thursday.

He said, “We are proud to be the first gold company whose products would be listed on the Lagos Futures and Commodities Exchange. The listing shall enable us facilitate our infrastructure development, expand capacity and create fungible products.

“This has potential to shore up Nigeria’s foreign reserve and create an alternative window for preservation of pension funds. A gold-backed security is a hedge against inflation and convenient preservation of capital.”

“As a global player, we comply with the practices and procedures of London Bullion Market Association and many other international bodies. Our refinery will also have multiplier effects on the development of rural areas anywhere it is located,” he added.

Mr Olusegun Akanji, the Divisional Head, Strategy and Business Solutions, Heritage Bank, said the lender had created a buying centre for verification of quality and quantity of gold and reference price to ensure price discovery in line with the global standard.

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Crude Oil

Oil Nears $70 as Easing Western Lockdowns Boost Summer Demand Outlook

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Crude oil

Oil prices rose for a third day on Wednesday as easing of lockdowns in the United States and parts of Europe heralded a boost in fuel demand in summer season and offset concerns about the rise of COVID-19 infections in India and Japan.

Brent crude rose 93 cents, or 1.4%, to $69.81 a barrel at 1008 GMT. U.S. West Texas Intermediate (WTI) crude rose 85 cents, or 1.3%, to $66.54 a barrel.

Both contracts hit the highest level since mid-March in intra-day trade.

“A return to $70 oil is edging closer to becoming reality,” said Stephen Brennock of oil broker PVM.

“The jump in oil prices came amid expectations of strong demand as western economies reopen. Indeed, anticipation of a pick-up in fuel and energy usage in the United States and Europe over the summer months is running high,” he said.

Crude prices were also supported by a large fall in U.S. inventories.

The American Petroleum Institute (API) industry group reported crude stockpiles fell by 7.7 million barrels in the week ended April 30, according to two market sources. That was more than triple the drawdown expected by analysts polled by Reuters. Gasoline stockpiles fell by 5.3 million barrels.

Traders are awaiting data from the U.S. Energy Information Administration due at 10:30 a.m. EDT (1430 GMT) on Wednesday to see if official data shows such a large fall.

“If confirmed by the EIA, that would mark the largest weekly fall in the official data since late January,” Commonwealth Bank analyst Vivek Dhar said in a note.

The rise in oil prices to nearly two-month highs has been supported by COVID-19 vaccine rollouts in the United States and Europe.

Euro zone business activity accelerated last month as the bloc’s dominant services industry shrugged off renewed lockdowns and returned to growth.

“The partial lifting of mobility restrictions, the expectation that tourism will return in the near future, and the lure of the psychologically important $70 mark are all likely to have contributed to the price rise,” Commerzbank analyst Eugen Weinberg said.

This has offset a drop in fuel demand in India, the world’s third-largest oil consumer, which is battling a surge in COVID-19 infections.

“However, if we were to eventually see a national lockdown imposed, this would likely hit sentiment,” ING Economics analysts said of the situation in India.

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