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FG, Oil Firms Optimistic About Increased Crude Production

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  • FG, Oil Firms Optimistic About Increased Crude Production

The Federal Government and oil firms have expressed optimism that crude production in the country will increase this year as efforts to stem militancy in the Niger Delta and introduce a new funding structure for joint venture assets gain traction.

Nigeria, which had been exempted from the deal by the Organisation of Petroleum Exporting Countries to cut output from January, hoped to pull its economy out of recession on the back of the upswing in global crude prices and restore oil production to at least 2.2 million barrels per day, President Muhammadu Buhari said in early December.

Negotiations with militants in the Niger Delta to end attacks on oil facilities are also progressing and a new funding scheme for upstream ventures with foreign partners was recently agreed.

For now, the country continues to suffer from the oil price downturn as oil accounts for about 90 per cent of its foreign exchange earnings and about 80 per cent of the government’s total revenue.

“The government is sure that the target to raise oil production to 2.2 million bpd or even more next year is realisable,” Femi Adesina, presidential spokesman told S&P Global Platts.

“The peace deal with militants to ensure zero disruption is in progress, though slow, but I can assure you that with a show of faith, the peace deal will be consummated in no time,” Adesina said.

Oil companies believe the return of peace in the restive Niger Delta region is key to the execution of the projects needed to increase production.

Just as the government needs higher oil production for more revenue, companies need the peace and security in the Niger Delta to be able to move in and repair damaged assets, especially in onshore and shallow waters, and even plan new projects.

“Once this is achieved, production can even reach 2.3 million bpd,” said one official at a Western oil company.

Nigerian oil output, which had recovered sharply in October from a 30-year low of around 1.4 million bpd in May, suffered a setback after another attack on the Trans-Forcados pipeline on November 2 impacted the transportation of the crude and shut-in the popular Forcados grade.

“With oil prices boosted by the OPEC and non-OPEC production cut, we companies are encouraged to invest next year but only if the Nigerian government can achieve a win-win situation with the militants in the Niger Delta,” the Managing Director, Britannia-U, Uju Ifejika, said.

A recovery in Nigeria’s oil production is premised not only on solving the Delta militancy, but also on the country’s successful negotiations of years of debts owed to its partners on counterpart funding for oil ventures, and introduction of new funding mechanism to drive investment in the upstream sector.

Nigeria negotiated $1.7bn off the $6.8bn in unpaid bills over the last four years owed its partners including Shell, ExxonMobil, Chevron, Total and Eni, to exit the cash call arrangement.

The nation was eyeing additional output of between 300,000 bpd and 700,000 bpd from onshore and shallow fields operated jointly with foreign partners over the next two years as a result of the financing deal, the spokesman for the Nigerian National Petroleum Corporation, Ndu Ughamadu, said.

“The Nigerian petroleum sector, which has recorded low investment in recent years, will soon experience an upbeat in a flurry of activities following the cash-call exit agreement between the NNPC and its Joint Venture partners,” he said.

“The agreement will stabilise and also increase upstream production over time. The repayment of the arrears in a sustainable manner is a key enabler to additional investment in the upstream sector in Nigeria,” the Chairman, Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry, Clay Neff, said.

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.

Economy

PENGASSAN to Shut Down 200,000bpd Agip Oil

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PENGASSAN to Shut Down 200,000bpd Agip Oil

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), an oil workers’ union, is threatening to shut down 200,000 barrels per day of crude oil production managed by Agip Oil Company Limited over what it described as unfair labour practices and intimidation of workers.

The Union, in a letter released on Wednesday, gave Agip Oil seven days to look into the concerns raised by the union or have its operations disrupted.

In the letter signed by Lumumba Okugbawa, General Secretary, the Union also accused Agip Oil of “subtle threat against our members and demobilisation of members access to the company facilities.”

PENGASSAN also urged Agip Oil to withdraw its “toxic memo’ and open discussion with the union branch leaders with a view to discuss and resolve the issues and strengthen industrial harmony.

However, as a law-abiding association, we view the insinuation by Agip management that the legitimate actions of the union was unlawful as laughable and a mockery of the relevant sections of the labour laws detailing on how industrial actions and disputes should follow.

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Economy

Gbajabiamila Says House of Reps Will Pass Petroleum Industry Bill in April

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Gbajabiamila Says House of Reps Will Pass Petroleum Industry Bill in April

Femi Gbajabiamila, the Speaker of the House of Representatives, on Wednesday, said the Reps will pass the Petroleum Industry Bill (PIB) into law in April 2021.

The speaker disclosed this during his opening remarks at the ongoing public hearing on the proposed legislation organised by the House Ad-hoc Committee on PIB.

He said “We intend to pass this bill by April. That is the commitment we have made. Some may consider it a tall order, but we will do it without compromising the thoroughness.

Gbajabiamila’s comment came two days after Ahmad Lawan, the Senate President, said the passage and assent to the Petroleum Industry Bill (PIB) will be done before the end of May.

Once passed into law, experts expect the bill to boost Nigeria’s economy, encourage competition and boost revenue.

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Economy

Egypt Leads Nigeria, South Africa in Foreign Direct Investment

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Egypt Leads Nigeria, South Africa in Foreign Direct Investment

The United Nations Trade Association has Nigeria recorded a total of $2.6 billion in Foreign Direct Investment (FDI) in 2020, below the $3.3 billion posted in the preceeding year.

South Africa, Africa’s most industrialised nation, reported $2.5 billion during the same year, slightly below Africa’s largest economy and 50 percent below the $4.6 billion attracted a year earlier.

The report also noted that Africa recorded a total of $38 billion FDI in the same year, representing a 18 percent decline from the $46 billion posted in the corresponding year of 2019.

However, Egypt led Nigeria and South Africa with $5.5 billion FDI, an increase of 38 percent from the preceeding year.

The report read in part, “FDI flows to Africa declined by 18% to an estimated $38 billion, from $46 billion in 2019. Greenfield project announcements, an indication of future FDI trends, fell 63% to $28 billion, from $77 billion in 2019. The pandemic’s negative impact on FDI was amplified by low prices of and low demand for commodities.

UNCTAD also noted that global foreign direct investment declined by 42 percent to an estimated $859 billion, down from $1.5 trillion in 2019.

The decline was concentrated in developed countries, where FDI flows fell by 69 percent to an estimated $229 billion. Flows to Europe dried up completely to -4 billion (including large negative flows in several countries). A sharp decrease was also recorded in the United States (-49%) to $134 billion.

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