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Nigeria, US, Libya’s Rising Oil Output Threaten Prices

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  • Nigeria, US, Libya’s Rising Oil Output Threaten Prices

The increase in the production of light sweet crude from Nigeria, United States and Libya has been said to be capable of contributing to a narrower price spread between light and medium crudes.

The US Energy Information Administration said in its Short-Term Energy Outlook that Nigerian production increased by six per cent to 1.66 million barrels per day in July, from 1.56 million bpd a month earlier, while Libyan crude output jumped by 19 per cent to 1.01 million bpd in July, from 850,000 bpd in June.

The US crude production increased to 9.43 million bpd, compared with 9.32 million bpd in June, the report said.

The EIA noted that crude oil prices were further supported as Saudi Arabia announced a cap on the country’s crude oil exports in August.

It, however, said it was unclear how much extra crude oil this cap would remove from the market given the country’s typical seasonal decline in crude oil exports because of an increase in crude oil use for power generation.

“However, Libya and Nigeria, two other OPEC members, continue to increase crude oil production, a contributing factor in keeping prices near $50 per barrel,” the IEA said.

The EIA said the voluntary production cuts by the Organisation of Petroleum Exporting Countries and non-OPEC countries resulted primarily in less medium, sour and heavy, sour crudes on the global market.

“As a result, over the past several months, the usual premium that light, sweet crudes command over medium and heavy crude oil has declined in many regions around the world,” it said.

According to the agency, trade press reports indicate that less crude oil is being exported from Saudi Arabia to Europe, which may be supporting prices of crudes like Urals, which are similar in quality to Saudi Arabian crude oil.

It said, “At the same time, higher crude oil production in Libya, Nigeria, and the United States is adding additional light, sweet crude oil into the market and could be contributing to a narrower price spread between light and medium crude oils.”

Nigeria’s average oil production including condensates, increased marginally to 2.06 million bpd in July, according to the petroleum ministry, Platts reported on Monday.

The ministry said the country’s crude output stood at 2.06 million bpd in July, up from 2.05 million bpd in June, and a sharp increase over the 1.6 million bpd output a year ago when production facilities were hit by attacks from the Niger Delta militants.

Nigerian oil output has climbed steadily following a respite in activity by militants demanding control of the region’s oil resources.

Loading of the popular export grade Forcados has resumed at its terminal in the Niger Delta after shutting for several months over the past year following attacks in February and November 2016.

The EIA expects US production to rise over the next two years and cross the 10 million bpd threshold in November 2018.

It sees output averaging 9.35 million bpd in 2017, up by 20,000 bpd from last month’s outlook, and 9.91 million bpd in 2018, up by 10,000 bpd from last month.

“The US oil production growth could slow as some US energy companies plan less investment spending for the rest of this year and the number of drilling rigs has recently increased at a slower clip,” the EIA Acting Administrator, Howard Gruenspecht, said in a statement.

The OPEC crude production held steady in July at an average 32.93 million bpd, compared with 32.61 million bpd in June, despite the sharp increases in Libya and Nigeria.

Saudi Arabia produced 10.2 million bpd in July, steady from 10.15 million bpd a month earlier.

The agency expects OPEC output to average 32.53 million bpd in 2017 and 32.96 million bpd in 2018.

The EIA expects Brent crude prices to average $50.71 per barrel in 2017 and $51.58 in 2018 and WTI prices to average $48.88 in 2017 and $49.58 in 2018 – steady from the agency’s June outlook.

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.

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Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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