Connect with us

Economy

Nigeria, Others Must Lower Costs, Says Kachikwu

Published

on

Pipeline Vandalism
  • 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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Continue Reading
Comments

Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

Published

on

Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

Continue Reading

Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

Published

on

Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

Continue Reading

Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

Published

on

Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending