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ExxonMobil, Taleveras, Ophir Win E’Guinea Oil Blocks

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  • ExxonMobil, Taleveras, Ophir Win E’Guinea Oil Blocks

United States oil giant, ExxonMobil, Nigeria-based Taleveras, UK’s Ophir Energy and Clonterf Energy have been announced winners of Equatorial Guinea’s oil acreages, after the latest licensing bid round held by the central African country.

Equatorial Guinea’s Minister of Mines and Hydrocarbons Gabriel Obiag-Lima made this known at a press conference Monday during the African Oil and Gas Conference held in Cape Town, South Africa, saying ExxonMobil has signed a Production Sharing Contract (PSC) with his country for oil acreage EG-11, effectively leading the list of acreage winners during the licensing bid round.

UK-based Ophir Energy won the Block EG-24, Taleveras, founded by Mr. Igho Sanomi, picked the highly potential Block EG-07, while Clonterf Energy landed Block EG-18.

According to the minister, the country’s 2016 open and competitive bid round was declared a success by industry analysts and watchers.

But as Equatorial Guinea announced the outcome of its licensing round, oil prices fell by about one per cent Monday on concerns that the cutting of ties with Qatar by top crude exporter, Saudi Arabia and other Arab states could hamper a global deal to reduce oil production.

Saudi Arabia, the United Arab Emirates (UAE), Egypt and Bahrain closed transport links with top Liquefied Natural Gas (LNG) and condensate shipper, Qatar, accusing it of supporting extremism and undermining regional stability.

Reuters reported that retaliatory measures by Qatar, such as suspending LNG supply deals, could force trading houses such as Trafigura, Glencore and Vitol, which frequently take LNG from Qatar and deliver to Egypt, to turn to Nigeria, U.S. and Algeria for LNG cargoes.

This development will also potentially leave Qatar free to push more LNG volumes into Europe where it has access to several import terminals.

The Middle East rift had initially pushed Brent crude prices up as much as one per cent Monday, as geopolitical fears rippled through the market.

But Brent later reversed gains, trading down 58 cents, or 1.12 per cent at $49.37 a barrel, while U.S. West Texas Intermediate futures were at $47.15 a barrel, down 51 cents, or 1.1 per cent.

With production capacity of about 600,000 barrels per day (bpd), Qatar’s crude output ranks as one of OPEC’s smallest, but tension within the Organisation of the Petroleum Exporting Countries (OPEC) could weaken the supply deal, aimed at supporting prices.

There were already doubts that the effort to curb production by almost 1.8 million bpd was seriously denting crude exports.

Brent futures have fallen more than eight per cent from their open on May 25, when OPEC opted to extend production cuts into 2018.

Outside of OPEC, South Sudan will drill 30 new wells this year and significantly boost oil output, as it chases a peak 350,000 bpd target by mid-2018, the petroleum minister said Monday.

Crude output in the U.S., which is not participating in the supply cuts, has also jumped more than 10 per cent since mid-2016 to 9.34 million bpd, close to levels of top producers Saudi Arabia and Russia.

Qatar accounts roughly for a third of global LNG and as the Middle East rift impacted oil prices, LNG traders adopted a wait-and-see approach, alert to potential disruption in supply.

However, there was an assumption that any trade shocks could be contained, given the well-supplied global LNG markets.

Qatar’s top clients in Japan and India have quickly received reassurances that supplies would continue as usual.

Still, traders startled by the development reportedly started to plan for any eventualities, especially any upsets to piped gas supplies from Qatar to the UAE, which consumes 1.8 billion cubic feet/day of Qatari gas.

Egypt also relies heavily on Qatari LNG brought in by Swiss commodity trade houses – Trafigura, Vitol and Glencore.

Qatar can block LNG exports to certain countries by issuing so-called destination restrictions.

Egypt is halfway through its annual LNG cargo delivery programme for 2017, with 50 shipments yet to arrive, of which at least 10 would come from Qatari, Reuters quoted a Cairo-based energy source as saying.

Under that scenario, trading houses with supply commitments to Egypt could turn to the United States, Algeria and Nigeria for replacement cargoes.

The deterioration in ties between Qatar and Egypt contrasts with 2013 when the LNG producer reportedly sent a gift of five LNG cargoes to Egypt when Mohamed Mursi, leader of the Muslim Brotherhood, served as Egyptian president.

Qatar is accused of backing militant groups — Muslim Brotherhood, ISIS (Islamic State) and al-Qaeda — some also backed by Iran — and broadcasting their ideology, an apparent reference to Qatar’s influential state-owned satellite channel, Al Jazeera.

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

Oil Firms Borrowed N130B From Banks in February – CBN

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Operators in the downstream, natural gas and crude oil refining sectors of the Nigerian oil and gas industry borrowed N130b from Nigerian banks in February amid the significant rise in global crude oil prices.

The debt owed by the oil and gas companies rose to N4.05tn in February from N3.92bn in January, according to the latest data obtained from the Central Bank of Nigeria on Monday.

Operators in the upstream and services subsectors owed banks N1.26tn in February, down from N1.27tn a month earlier.

The combined debt of N5.31tn owed by oil and gas operators as of February 2021 represents 25.29 percent of the N21tn loans advanced to the private sector by the banks, according to the sectoral analysis by the CBN of deposit money banks’ credit.

Oil and gas firms received the biggest share of the credit from the deposit money banks to the private sector.

The slump in oil prices in 2020 as a result of the coronavirus pandemic hit many oil and gas companies hard, forcing them to slash their capital budgets and suspend some projects.

A global credit rating agency, Moody’s Investors Service, said last month that the outlook for Nigeria’s banking system remains negative, reflecting expectations of rising asset risk and weakening government support capacity over the next 12 to 18 months.

“Nigerian banks’ loan quality will weaken in 2021 as coronavirus support measures implemented by the government and central bank last year, including the loan repayment holiday, are unwound,” said Peter Mushangwe, an analyst at Moody’s.

The rating agency estimated that between 40 percent and 45 percent of banking loans were restructured in 2020, easing pressure on borrowers following the outbreak of the pandemic.

Another global credit rating agency, Fitch Ratings, had noted in a December 8 report that Nigerian bank asset quality had historically fallen with oil prices, with the oil sector representing 28 percent of loans at the end of the first half of 2020.

It said the upstream and midstream segments (nearly seven percent of gross loans) had been particularly affected by low oil prices and production cuts.

“However, the sector has performed better than expected since the start of the crisis, limiting the rise in credit losses this year due to a combination of debt relief afforded to customers, a stabilisation in oil prices, the hedging of financial exposures and the widespread restructuring of loans to the sector following the 2015 crisis,” it said.

The rating agency predicted that Nigerian bank asset quality would weaken over the next 12 to 18 months.

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Fall in Economic Activities in Nigeria Created N485.51 Billion Fiscal Deficit in January -CBN

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The drop in economic activities in Africa’s largest economy Nigeria led to a N485.51 billion fiscal deficit in January, according to the latest data from the Central Bank of Nigeria (CBN).

In the monthly economic report released on Friday by the apex bank, the weak revenue performance in January 2021 was due to the decline in non-oil receipts following the lingering negative effects of COVID-19 pandemic on business activities and the resultant shortfall in tax revenues.

In part, the report read, “Federally collected revenue in January 2021 was N807.54bn.

“This was 4.6 per cent below the provisional budget benchmark and 12.8 per cent lower than the collection in the corresponding period of 2020.

“Oil and non-oil revenue constituted 45.4 per cent and 54.6 per cent of the total collection respectively. The modest rebound in crude oil prices in the preceding three months enhanced the contribution of oil revenue to total revenue, relative to the budget benchmark.

“Non-oil revenue sources underperformed, owing to the shortfalls in collections from VAT, corporate tax, and FGN independent revenue sources.

“Retained revenue of the Federal Government of Nigeria was lower-than-trend due to the lingering effects of the COVID-19 pandemic.”

“At N285.26bn, FGN’s retained revenue fell short of its programmed benchmark and collections in January 2020, by 41.3 per cent and 7.5 per cent respectively.

“In contrast, the provisional aggregate expenditure of the FGN rose from N717.6bn in December 2020 to N770.77bn in the reporting period, but remained 14.4 per cent below the monthly target of N900.88bn.

“Fiscal operations of the FGN in January 2021 resulted in a tentative overall deficit of N485.51bn.”

The report noted that Nigeria’s total public debt stood at N28.03 trillion as of the end-September 2020, with domestic and external debts accounting for 56.5 percent and 43.5 percent, respectively.

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NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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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.

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