Markets

Angola Oil Minister Says Nation Needs Crude to Rebound to $60

Published

7 years ago

August 31, 2017

Angola Oil Minister Says Nation Needs Crude to Rebound to $60

Angola’s Petroleum Minister Jose Maria Botelho de Vasconcelos said it’s essential for the southern African nation’s economy that oil prices rebound to $60 a barrel this year.

“That would be extremely important,” Botelho de Vasconcelos said Monday in an interview in the country’s capital Luanda. “We’ve been getting signs from the market that prices could reach $60 by the end of the year.”

Angola, which depends on crude shipments for 97 percent of its exports, joined fellow OPEC members nine months ago in curbing output in a bid to bolster prices. President-elect Joao Lourenco, who takes over next month as the 38-year rule of Jose Eduardo dos Santos comes to an end, must revive the economy of Africa’s second-largest oil producer, which has stagnated following the slump in crude since mid-2014.

Brent crude, the benchmark for Angola, traded at $51.46 as of 4:07 p.m. in London on Wednesday. That compares with the $82 Angola needs to balance its budget this year, according to April estimates by Fitch Ratings Ltd.

The oil minister said it’s too soon to say whether the Organization of Petroleum Exporting Countries should extend production cuts beyond next March.

“November will be the best time to analyze whether its best to extend the cuts or not,” he said. OPEC is due to hold a ministerial meeting on Nov. 30.

Economic Diversification

Angola emerged from a civil war in 2002 to become of one the world’s fastest growing economies, mostly because of oil. Yet, the days of sky-high growth in sub-Saharan Africa’s third-largest economy have come to an end and a third of the population still lives on less than $2 a day. Lourenco, whose ruling Popular Movement for the Liberation of Angola Party won elections earlier this month, has vowed to push hard to diversify the economy.

“Oil helped relaunch the diversification of the economy but it can’t continue to have so much weight in the economy,” Botelho de Vasconcelos said.

Angola was the world’s fourth-biggest coffee producer and a top exporter of sugarcane, bananas, sisal and cotton before a 27-year civil war after independence from Portugal in 1975 led to a mass exodus of farmers to the cities. Today, the country has the world’s most concentrated economy in terms of exports after Iraq, according to the United Nations Development Programme,

Angola’s political and tax environment is discouraging investment that might counter declining oil output, analysts at Tudor Pickering Holt said this month. International Energy Agency figures show total Angolan output slipped to 1.65 million barrels a day in July, meaning the nation has exceeded its promised cuts under the OPEC deal.

Oil Investment

The minister said foreign oil companies continue to invest in Angola and tenders for onshore blocks that were suspended earlier this year will be relaunched after a new government is appointed next month. A tender for oil blocks in the Namibe Basin off southern Angola may also be opened next year to offset declines at older fields, he said.

“It’s about 10 offshore blocks, although there is nothing concrete at the moment,” said Botelho de Vasconcelos.

His ministry has worked with oil companies to cut production costs in Angola to an average of about $10-12 a barrel from about $15-20 three years ago, he said. Measures include giving producers greater flexibility to explore marginal fields that would previously have required separate tenders.

“We’ve been getting positive feedback from oil companies,” he said. “Things have slowed down but they have continued to show an interest in staying in the country.”

The 67-year-old, who has been oil minister since 2008 after serving a first term in the post from 1999 to 2002, declined to comment on his future plans at the helm of the ministry.

“I would rather wait for a new government to be appointed,” he said. “But, as you know, we all have several stages during our lifetime and there is a period in which a new generation should step forward.”

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Samed Olukoya

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

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

Published

3 days ago

May 16, 2024

Samed Olukoya

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

Crude Oil

Oil Prices Hold Steady as U.S. Demand Signals Strengthening

Published

3 days ago

May 16, 2024

Samed Olukoya

Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

Crude Oil

Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

Published

3 days ago

May 16, 2024

Samed Olukoya

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.