- OPEC Will Resist Sabotage by Shale Oil Producers, Says Kachikwu
The Minister of State for Petroleum, Dr. Ibe Kachikwu, has stated that the Organisation of Petroleum Exporting Countries (OPEC) will resist any deliberate action by shale producers to sabotage the oil market.
In their continuing efforts to stabilise the oil market, 14 OPEC member countries and 10 participating non-OPEC producing countries, led by Russia, extended their production adjustments, which originally started January 1, 2017, for a further period of nine months, beginning July 1, 2017.
The move will keep roughly two per cent of global production off the market in an attempt to boost prices.
Despite attempts by the cartel to reduce the excess inventory in the market to boost prices, Reuters reported that in the Permian Basin – the largest US oilfield – producers are pumping at the fastest rate in years, taking advantage of new technology, low costs and steady oil prices to reap profits at OPEC’s expense.
OPEC has acknowledged the global clout of shale but seeks to hinder its growth by keeping just enough oil supply on the market to hold prices below $60 per barrel.
“All shale companies in the US are small companies. The reality is that at $50 to $60 a barrel, (the US oil industry) can’t break beyond 10 million barrels per day,” Reuters quoted Noureddine Boutarfa, who represented Algeria at the OPEC meeting, as saying.
“For all OPEC members, $55 (per barrel) and a maximum of $60 is the goal at this stage,” said Iran’s oil minister, Bijan Zanganeh.
“So, is that price level not high enough to encourage too much shale? It seems it is good for both,” he added.
OPEC has, however, realised that supply cuts and higher prices only make it easier for the shale industry to deliver higher profits after it found ways of slashing costs when Saudi Arabia turned up the taps three years ago.
OPEC meets again in November to reconsider output policy.
Though many OPEC members now appear to believe that shale has to be accommodated, there are indications that another fight is around the corner as Kachikwu has hinted that the cartel might review its strategies in the event of any sabotage by the shale producers.
“If we get to a point where we feel frustrated by a deliberate action of shale producers to just sabotage the market, OPEC will sit down again and look at what process it is we need to do, Reuters quoted Kachikwu as saying.
The history of the relationship between OPEC and the US shale oil industry has evolved a great deal since the cartel discovered it had a surprise rival emerging in a core market for its oil around five years ago.
US shale bankers went to Vienna during the recent OPEC meeting and the cartel is said to be planning to send top officials to Texas in a bid to understand whether the two industries can co-exist or are poised to embark on another major fight in the near future.
“We have to coexist,” said Khalid al-Falih, Saudi Arabia’s energy minister, who pushed through OPEC production cuts in December, 2016.
Riyadh’s previous strategy was to pump as much oil as possible and try to kill off US shale with low oil prices.
Shale’s limitations, including rising service costs were discussed by OPEC.
“We had a discussion on (shale) and how much that has an impact,” said Ecuador Oil Minister Carlos Pérez.
“But we have no control over what the US does and it is up to them to decide to continue or not,” he reportedly added.
When the OPEC delegates asked the chief executive of Permian oil producer, Centennial Resource Development Inc, Mark Papa, to give a presentation on shale’s potential, he reportedly appeared to have played his cards close to his chest.
“In terms of the threat, we still don’t know how much (US shale) will be producing in the near future,” Venezuela’s oil minister, Nelson Martinez, said after the talk.
Some US shale leaders may also want a better insight into OPEC’s thinking and help OPEC understand that shale is not a flash in the pan.
Some of OPEC’s customers are happy to see an alternative as India, the world’s third-largest oil consumer, said it was looking to the United States for greater supply.
“The new normal has to be accepted,” India’s energy minister, Dharmendra Pradhan, had said ahead of the OPEC meeting.
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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