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FG to Pay First Tranche of $5.1bn Cash Calls Debt to IOCs in April

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Emmanuel Ibe Kachikwu
  • FG to Pay First Tranche of $5.1bn Cash Calls Debt to IOCs in April

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has disclosed that the federal government will next month disburse the first tranche of the $5.1 billion Joint Venture (JV) cash calls debt it owes international oil companies (IOCs) operating in the country.

The government last December had negotiated terms with the IOCs to formally exit the JV cash call obligations it owes Shell, Chevron, Total, ExxonMobil and Nigeria Agip Oil Company (NAOC).

It got a discount of $1.7 billion from the companies and agreed to pay the balance of $5.1 billion over a five-year period.

Kachikwu said on Wednesday during the opening session of the maiden Nigeria Oil and Gas Opportunity Fair (NOGOF) in Uyo, the capital of Akwa Ibom State, that the government was in the final stages of making the first payment by April.

The NOGOF was initiated and organised by the Nigerian Content Development and Monitoring Board (NCDMB) to showcase opportunities for advancing local content application in the country’s oil industry.

Kachikwu equally explained that as part of the government’s four-year economic recovery plan during which the country hopes to grow its crude oil production to 2.5 million barrels per day (mbpd), the government also wants the IOCs and other operators to extend their investment commitments to other aspects of the country’s oil and gas sector.

He said the government would expect the oil majors to go beyond exploration and production activities, to refining in the country.

“Unless you find the funding, everything we say is entertainment, and so we must begin to focus very seriously as a nation on dealing with the financial challenges of the sector, not just for the big players but indeed more importantly the small players.

“So, we have taken the very first steps in the ‘7 Big Wins’ launched by the president to look at how to exit the cash calls.

“We had reached an agreement with the majors in December. We are trying to finalise the first stage of the payment in April,” Kachikwu said in his comments on the challenges facing Nigeria’s oil industry.

Speaking on capacity in the oil and gas sector as well as the opportunities, the minister said: “We have the capacity to grow oil production in this country in excess of three million barrels per day, so when we sit crying about the difficulties, I think we need to focus on the opportunities that are there with the resources that we have been given to find solutions to the problems that we see.”

He added: “We are focused on local refining because after 40 years, our refineries are decrepit, so the time has come to move away from transporting and exporting crude, to being able to refine petroleum in its every facet.
“The supply chain in the world has changed. Being a supplier of crude does not confer on you any advantage.”

He further argued that the business model in the country’s oil industry cannot continue to be all about drilling for oil for transportation and exports, adding: “It must be to drill to refine and export.”

Kachikwu also called on operators in the industry to deepen their areas of specialisation and prevent overcrowding in certain areas which he said muddles up the sector.

“The greatest problem of the Nigerian space is overcrowding. There are tonnes and tonnes of opportunities but we must succeed in creating business models.

“Once we succeed in creating business models, the time for individual selective creativity would emerge. For us to move forward as a country, we have to reduce the time we spend on bureaucracy,” he stated.

He equally explained that his ministry had begun processes to reduce the amount of time lost to bureaucracy, adding that it is absolutely necessary to provide services and not add more bottlenecks to the system.

In his opening remarks, the Executive Secretary of NCDMB, Simbi Wabote, explained that the conference was initiated to showcase the business opportunities available to local content providers in the industry’s upstream, downstream and midstream segments.

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.

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Crude Oil

Nigeria’s Crude Oil Production Falls for Second Consecutive Month, OPEC Reports

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Crude Oil

Nigeria’s crude oil production declined for the second consecutive month in March, according to the latest report from the Organization of Petroleum Exporting Countries (OPEC).

Data obtained from OPEC’s Monthly Oil Market Report for April 2024 reveals that Nigeria’s crude oil production depreciated from 1.322 million barrels per day (mbpd) in February to 1.231 mbpd in March.

This decline underscores the challenges faced by Africa’s largest oil-producing nation in maintaining consistent output levels.

Despite efforts to stabilize production, Nigeria has struggled to curb the impact of oil theft and pipeline vandalism, which continue to plague the industry.

The theft and sabotage of oil infrastructure have resulted in significant disruptions, contributing to the decline in crude oil production observed in recent months.

The Nigerian National Petroleum Company Limited (NNPCL) recently disclosed alarming statistics regarding oil theft incidents in the country.

According to reports, the NNPCL recorded 155 oil theft incidents within a single week, these incidents included illegal pipeline connections, refinery operations, vessel infractions, and oil spills, among others.

The persistent menace of oil theft poses a considerable threat to Nigeria’s economy and its position as a key player in the global oil market.

The illicit activities not only lead to revenue losses for the government but also disrupt the operations of oil companies and undermine investor confidence in the sector.

In response to the escalating problem, the Nigerian government has intensified efforts to combat oil theft and vandalism.

However, addressing these challenges requires a multi-faceted approach, including enhanced security measures, regulatory reforms, and community engagement initiatives.

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Crude Oil

Oil Prices Edge Higher Amidst Fear of Middle East Conflict

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Crude Oil

Amidst growing apprehensions of a potential conflict in the Middle East, oil prices have inched higher as investors anticipate a strike from Iran.

The specter of a showdown between Iran or its proxies and Israel has sent tremors across the oil market as traders brace for possible supply disruptions in the region.

Brent crude oil climbed above the $90 price level following a 1.1% gain on Wednesday while West Texas Intermediate (WTI) hovered near $86.

The anticipation of a strike, believed to be imminent by the United States and its allies, has cast a shadow over market sentiment. Such an escalation would follow Iran’s recent threat to retaliate against Israel for an attack on a diplomatic compound in Syria.

The trajectory of oil prices this year has been heavily influenced by geopolitical tensions and supply dynamics. Geopolitical unrest, coupled with ongoing OPEC+ supply cuts, has propelled oil prices nearly 18% higher since the beginning of the year.

However, this upward momentum is tempered by concerns such as swelling US crude stockpiles, now at their highest since July, and the impact of a hot US inflation print on Federal Reserve rate-cut expectations.

Despite the bullish sentiment prevailing among many of the world’s top traders and Wall Street banks, with some envisioning a return to $100 for the global benchmark, caution lingers.

Macquarie Group has cautioned that Brent could enter a bear market in the second half of the year if geopolitical events fail to materialize into actual supply disruptions.

“The current geopolitical environment continues to provide support to oil prices,” remarked Warren Patterson, head of commodities strategy for ING Groep NV in Singapore. However, he added, “further upside is limited without a fresh catalyst or further escalation in the Middle East.”

The rhetoric from Iran’s Supreme Leader, Ayatollah Ali Khamenei, reaffirming a vow to retaliate against Israel, has only heightened tensions in the region.

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Commodities

Geopolitical Uncertainty Drives Gold Prices Higher Despite Fed Rate Cut Concerns

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gold bars - Investors King

As tensions simmer in the Middle East and concerns loom over Federal Reserve policy, gold continues its upward trajectory, defying expectations and reinforcing its status as the ultimate safe-haven asset.

The latest surge in gold prices comes amidst escalating geopolitical tensions in the Middle East.

Reports suggest that the United States and its allies are bracing for potential missile or drone strikes by Iran or its proxies on military and government targets in Israel. Such a significant escalation in the six-month-old conflict has sent shockwaves through financial markets, prompting investors to seek refuge in gold.

Despite initial setbacks earlier in the week, gold resumed its blistering rally, buoyed by the specter of geopolitical uncertainty.

On Wednesday, the precious metal witnessed its most significant decline in almost a month following a hotter-than-expected US inflation readout.

This unexpected data led traders to recalibrate their expectations for Federal Reserve interest rate cuts this year, causing the yield on 10-year Treasuries to surge above 4.5%.

However, gold’s resilience in the face of shifting market dynamics remains remarkable. Even as concerns mount over the Fed’s rate-cutting trajectory, the allure of gold as a safe-haven asset persists.

Prices hover just shy of a record high reached earlier in the week, propelled by robust buying from central banks.

Market analysts interviewed by Bloomberg anticipate further gains in gold prices, citing continued geopolitical tensions and strong momentum in the market.

The precious metal’s near-20% rally since mid-February underscores its enduring appeal as a hedge against uncertainty and inflationary pressures.

At 9:54 a.m. in Singapore, spot gold rose 0.3% to $2,341.58 an ounce, signaling continued investor confidence in the metal’s resilience.

The Bloomberg Dollar Spot Index, meanwhile, remained relatively unchanged near its highest level since November.

Silver, often considered a bellwether for precious metals, held steady after reaching a three-year high, while platinum and palladium also registered gains.

As the world navigates through a complex web of geopolitical tensions and economic uncertainties, gold remains a beacon of stability in an increasingly volatile landscape.

Its ability to weather market fluctuations and maintain its allure as a safe-haven asset reaffirms its timeless appeal to investors seeking refuge amidst uncertainty.

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