- Shale: Nigeria, Others Must Lower Costs
Members of the Organisation of the Petroleum Exporting Countries must lower production costs to compete better with shale oil producers, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said.
Industry analysts have said the rising shale oil production in the United States could upend efforts by major producers including OPEC to bring global supply and demand for crude back into balance.
The US shale oil production for March is expected to rise by the most in five months, as energy companies ramp up drilling on the back of the recent rally in oil prices.
Kachikwu, in an interview with the CNBC Africa, also said he was confident that an output reduction agreed in November would see oil prices hold.
Nigeria, which relies on crude sales for around two-thirds of government revenue, saw its economy shrink by 1.5 per cent in 2016 – the first full-year contraction in 25 years – largely due to lower oil receipts.
Eleven of OPEC’s 13 members along with 11 non-OPEC countries agreed to make cuts for the first half of 2017, although Nigeria and fellow OPEC member Libya were exempt due to production setbacks suffered last year.
“OPEC members must lower production costs to compete better with shale producers,” said Kachikwu, quoted in a tweet on the CNBC Africa’s feed.
Kachikwu said he was “impressed with the work OPEC has done” and “confident prices will hold”, but added, “What is more fundamental is what OPEC countries can begin to do for themselves in term of costs, diversification.”
The November 30 agreement to cut production prompted oil prices to rise by $10 a barrel, although they have been trading in a narrow $3 range in the last few weeks.
But analysts say that a revival in the US shale production is likely to limit any major price recovery in crude oil.
The Secretary-General of OPEC, Mohammed Barkindo, on Monday in Abuja said OPEC members lost a cumulative revenue of about $1tn as a result of the crash in crude oil prices, describing the crisis in the oil sector as the worst ever in recent memory.
Crude oil prices crashed from over $100 per barrel in 2014 to as low as $23 in 2016, a development that threw many oil dependent countries into economic crisis.
The Group Managing Director, Nigerian National Petroleum Corporation, Dr. Maikanti Baru, said last week that unit technical cost of production had significantly dropped from above $70 per barrel in 2014 to about $27 per barrel as of 2016 ending.
He said efforts were ongoing to further drive down cost, adding, “But this cannot be achieved without the support, cooperation and collaboration of all stakeholders in the industry. It is worthy to mention that cost reduction will also serve as incentives for investors to grow reserves, increase profitability, thus leading to increased return on investment.”
The pace of the recovery in the US shale oil output is set to pick up steam this month as more crude-producing regions return to growth, according to the US Energy Information Administration’s latest drilling productivity report.
The EIA forecasts the US shale oil production in seven major regions will rise by a total of 80,000 barrels per day to 4.87 million bpd in March.
This is the third month in a row the agency has projected output to rise.
The increase is nearly double the 41,000-bpd climb the agency expected for February in its last report.
NNPC Supplies 1.44 Billion Litres of Petrol in January 2021
The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.
The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.
NNPC said the 1.44 billion litres translate to 46.30 million litres per day.
Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).
The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.
Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.
For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.
Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.
Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.
NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021
The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.
This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).
The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.
It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.
NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.
Nigeria’s Food Inflation Hits 22.95 Percent in March 2021
Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.
Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.
Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.
On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.
Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.
Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.
The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.
However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.
Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.
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