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EU Leaders Blast May Government’s State of Brexit Preparedness

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  • Sterling declines to intraday low on policy maker’s comments
  • Manfred Weber says U.K. has ‘no idea’ about ramifications

European Union policy makers intensified their criticism of Prime Minister Theresa May’s plans to leave the bloc, saying that the U.K. appeared clueless about the implications of Brexit.

The pound sank to an intraday low after Slovak Prime Minister Robert Fico said it’s not clear that the U.K. knows what it wants and European lawmaker Manfred Weber demanded May’s government produce “clear proposals” as it prepares to trigger Brexit negotiations by the end of March. Weber made the comments after meeting U.K. Brexit Secretary David Davis on Tuesday.

“In my meeting with David Davis I unfortunately received no new insight into how the British government pictures Brexit,” Weber, an ally of German Chancellor Angela Merkel who leads the EU parliament’s Christian Democrats, told reporters in Strasbourg, France. “There is no idea what Brexit really means.”

The comments highlight frustration in continental Europe with May’s efforts to follow through on the results of a June referendum in which 52 percent of British voters opted for the unprecedented step of quitting the EU. The vote was called by May’s predecessor, David Cameron, who had campaigned for Britain to remain in the bloc that the country joined 43 years ago.

Weber’s comments sent sterling down by as much as 0.6 percent to $1.2423. The pound is up from a low this year of $1.2123 reached on Oct. 11.

Davis signaled at the Strasbourg meeting that the U.K. wants to retain access to the European single market, according to Weber, who repeated the stance of the rest of the 28-nation bloc that such a privilege requires accepting the EU’s tenet on the free movement of people.

“The economic dimension is clear for Great Britain,” Weber said. “They have a strong interest to keep a kind of a relationship to the single market.”

‘Very Intense’

“The government’s position hasn’t changed on this,” May’s spokesman, Greg Swift, told reporters in London following Weber’s briefing. “We are very clear that what we want is a trading relationship that allows U.K. companies to trade with and within the single market and lets European businesses do the same.”

Guy Verhofstadt, the European Parliament’s representative on Brexit matters who also met with Davis, reiterated the necessary link between access to the single market and the free movement of people while also saying that there was common ground on the timing of the U.K.’s departure.

“We agreed on the need that this process needs to start as early as possible and needs to finish, in any case, before the next European elections” in mid-2019, Verhofstadt told reporters. He also cautioned that the window for negotiations could be as short as 14 or 15 months, which will make the talks “very intense.”

In Slovakia, Fico, whose country holds the EU’s rotating presidency, repeated that member states won’t make concessions on the four freedoms ensuring the free movement of labor, goods, services and capital inside the trading bloc.

“I’m not sure whether the U.K. knows what it wants,” Fico said during a conference in the capital Bratislava Tuesday. “The split will be painful, but should it be we who suffer? The biggest loss for the EU would be if the U.K. comes out from the negotiations a winner.”

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.

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Crude Oil

Sirius Petroleum and Baker Hughes Collaborate on OML 65 Drilling in Nigeria

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Sirius Petroleum, the Africa-focused oil and gas production and development company, has signed a memorandum of understanding with Baker Hughes. The MoU names Baker Hughes as the approved service provider for Phase 1 of the Approved Work Program (AWP) of the OML 65 permit, a large onshore block in the western Niger Delta, Nigeria. Baker Hughes will provide a range of drilling and related services at a mutually agreed upon pricing structure to deliver the initial nine-well program.

Sirius has signed various legal agreements with COPDC, a Nigerian joint venture, to implement this program. COPDC has signed a Financial and Technical Services Agreement (FTSA) with the Nigerian Petroleum Development Company (NPDC) for the development and production of petroleum reserves and resources on OML 65. The FTSA includes an AWP which provides for development in three phases of the block. and Sirius has entered into an agreement with the joint venture to provide financing and technical services for the execution of the PTA.

The joint venture will initially focus on the redevelopment of the Abura field, involving the drilling and completion of up to nine development wells, intended to produce the remaining 2P reserves of 16.2 Mbbl, as certified by Gaffney Cline and Associates (GCA) in a CPR dated June 2021.

Commenting, Toks Azeez, Sales & Commercial Executive of Baker Hughes, said: “We are extremely happy to have been selected for this project with Sirius and their JV partners. This project represents an important step towards providing our world-class integrated well-service solutions in one of the most prolific fields in the Niger Delta. Baker Hughes’ technological efficiency and execution excellence will help Sirius improve its profitability and competitiveness in the energy market.”

Bobo Kuti, CEO of Sirius, commented: “We are delighted to have secured the services of one of the world’s leading energy technology companies to work with our joint venture team to deliver the approved work program on the block. OML 65. We look forward to building a long and mutually beneficial partnership with Baker Hughes.”

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Energy

Egbin Decries N388B NBET Debt, Idle Capacity

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Egbin Power Plc, the biggest power station in Nigeria, has said it is owed N388bn by the Nigerian Bulk Electricity Trading Plc for electricity generated and fed into the national grid.

The company disclosed this on Tuesday during an oversight visit by the Senate Committee on Privatisation, led by its Chairman, Senator Theodore Orji, to the power station, located in Ikorodu, Lagos.

The government-owned NBET buys electricity in bulk from generation companies through Power Purchase Agreements and sells it to the distribution companies, which then supply it to the consumers.

The Group Managing Director, Sahara Power Group, Mr. Kola Adesina, told the lawmakers that the total amount owed to Egbin by NBET included money for actual energy wheeled out, interest for late payments and available capacity payments.

Egbin is one of the operating entities of Sahara Power Group, which is an affiliate of Sahara Group. The plant has an installed capacity of 1,320MW consisting of six turbines of 220 megawatts each.

The company said from 2020 till date, the plant had been unable to utilize 175MW of its available capacity due to gas and transmission constraints.

Adesina said, “At the time when we took over this asset, we were generating averagely 400MW of electricity; today, we are averaging about 800MW. At a point in time, we went as high as 1,100MW. Invariably, this is an asset of strategic importance to Nigeria.

“The plant needs to be nurtured and maintained. If you don’t give this plant gas, there won’t be electricity. Gas is not within our control.

“Our availability is limited to the regularity of gas that we receive. The more irregular the gas supply, the less likely there will be electricity.”

He noted that if the power generated at the station was not evacuated by the Transmission Company of Nigeria, it would be useless.

Adesina said, “Unfortunately, as of today, technology has not allowed the power of this size to be stored; so, we can’t keep it anywhere.

“So, invariably, we will have to switch off the plant, and when we switch off the plant, we have to pay our workers irrespective of whether there is gas or transmission.

“Sadly, the plant is aging. So, this plant requires more nurturing and maintenance for it to remain readily available for Nigerians.

“Now, where you have exchange rate move from N157/$1 during acquisition in 2013 to N502-N505/$1 in 2021, and the revenue profile is not in any way commensurate to that significant change, then we have a very serious problem.”

He said at the meeting of the Association of Power Generation Companies on Monday, members raised concern about the debts owed to them.

He added, “All the owners were there, and the concern that was expressed was that this money that is being owed, when are we going to get paid?

“The longer it takes us to be paid, the more detrimental to the health and wellbeing our machines and more importantly, to our staff.”

Adesina lamented that the country’s power generation had been hovering around 4,000MW in recent years.

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Oil Rises on U.S. Fuel Drawdowns Despite Surging Coronavirus Cases

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Oil prices climbed on Wednesday after industry data showed U.S. crude and product inventories fell more sharply than expected last week, reinforcing expectations that demand will outstrip supply growth even amid a surge in Covid-19 cases.

U.S. West Texas Intermediate (WTI) crude futures rose 48 cents, or 0.7%, to $72.13 a barrel, reversing Tuesday’s 0.4% decline.

Brent crude futures rose 34 cents, or 0.5%, to $74.82 a barrel, after shedding 2 cents on Tuesday in the first decline in six days.

Data from the American Petroleum Institute industry group showed U.S. crude stocks fell by 4.7 million barrels for the week ended July 23, gasoline inventories dropped by 6.2 million barrels and distillate stocks were down 1.9 million barrels, according to two market sources, who spoke on condition of anonymity.

That compared with analysts’ expectations for a 2.9 million fall in crude stocks, following a surprise rise in crude inventories the previous week in what was the first increase since May.

Traders are awaiting data from the U.S. Energy Information Administration (EIA) on Wednesday to confirm the drop in stocks.

“Most energy traders were unfazed by last week’s build, so expectations should be high for the EIA crude oil inventory data to confirm inventories resumed their declining trend,” OANDA analyst Edward Moya said in a research note.

On gasoline stocks, analysts had expected a 900,000 barrel decline drop in the week to July 23.

“The U.S. is still in peak driving season and everyone is trying to make the most of this summer,” Moya said.

Fuel demand expectations are undented by soaring cases of the highly infectious delta variant of the coronavirus in the United States, where the seven-day average for new cases has risen to 57,126. That is about a quarter of the pandemic peak.

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