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Nigeria Losing Competitive Edge in LNG Market – Attah

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  • Nigeria Losing Competitive Edge in LNG Market – Attah

With several Liquefied Natural Gas projects in the country stalled over the past few years amid vast untapped gas reserves, Nigeria is losing its competitive advantage in the global LNG market, the Managing Director and Chief Executive Officer, Nigeria LNG Limited, Mr. Tony Attah, has said.

He stated this at the ongoing Nigeria International Petroleum Summit in Abuja, adding that projections put gas at the top of the most competitive and strategic investments in the global energy market.

Attah was quoted in a statement as saying, “Nigeria started 24 months after Qatar. Qatar now produces 77 million tonnes per annum and is the number one LNG supplier in the world, while Nigeria is still on 22 MTPA. Australia is already flooding the market and will knock down Qatar to the third or fourth place.

“In Africa, significant gas finds in excess of 127 trillion cubic feet in Mozambique have created the potential for another African super player. Mozambique is expected to become the second-largest exporter of liquefied natural gas by 2025, as the country steps up production from 10 million tonnes per annum in 2017 to an envisaged 50 Mtpa.”

Three LNG projects in Nigeria, namely, Olokola LNG, Brass LNG and the NLNG’s Train 7, have suffered setback as a result of the delay in taking final investment decision by the stakeholders.

The OK LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation left.

The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013.

According to Attah, the real investment opportunity was last year when prices were low.

“But it is not too late. That is why we need to take the decision on Train 7 now so we can stay within the Top 5 space. The future is gas and the NLNG is ready to play. It is time for gas.”

The NLNG MD said for Nigeria to remain competitive in the global oil and gas industry, upstream investment needed to be increased.

“It’s time to prepare for the likely demand outlook that’s positive, and has out-performed projections in the last three years. Let’s get back to exploration and production activities,” he added.

Other strategies recommended by Attah included stable regulatory framework and ease of doing business as well as strategic implementation of cost management by developing projects that “are competitive under current pricing, implementing structural cost-saving measures, such as standardised modular approaches to plant construction, and embarking on new E & P projects that have shorter payback periods.”

The Train 7 project by the NLNG is aimed at increasing its production capacity from the current 22 MTPA to 30 MTPA of the LNG.

Attah said a combination of factors would give gas an edge as the preferred energy of the future, adding that the global LNG trade was projected to nearly triple, from about 12Tcf in 2015 to around 31Tcf in 2040.

He said, “Electric power sector carbon emissions are projected to be flat through 2050 as a result of favourable market conditions for natural gas and supportive policies for renewables compared with coal. The projections are underpinned by the prospect of the global economy growing at an average rate of 3.4 per cent per year, a population that expands from 7.4 billion today to more than nine billion in 2040.

“Global energy consumption will increase in the future but on the other side of the fence, we also see the clamouring for cleaner energy rising and that is where gas comes in. Coal will be totally displaced as a source of energy, followed by crude oil. Oil will still be in demand but (particularly as a source of power) will go down by about 50 per cent.”

According to him, countries like the United Kingdom, Sweden, Norway and many other countries are making moves to significantly reduce their carbon footprint.

“Norway aims for all new passenger cars and vans sold in 2025 to be zero-emission vehicles while Sweden has committed to 100 per cent renewable energy by 2040.”

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

Oil Prices Rebound After Three Days of Losses

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After enduring a three-day decline, oil prices recovered on Thursday, offering a glimmer of hope to investors amid a volatile market landscape.

The rebound was fueled by a combination of factors ranging from geopolitical developments to supply concerns.

Brent crude oil, against which Nigeria oil is priced, surged by 79 cents, or 0.95% to $84.23 a barrel while U.S. West Texas Intermediate (WTI) crude climbed 69 cents, or 0.87% to $79.69 per barrel.

This turnaround came on the heels of a significant downturn that had pushed prices to their lowest levels since mid-March.

The recent slump in oil prices was primarily attributed to a confluence of factors, including the U.S. Federal Reserve’s decision to maintain interest rates and concerns surrounding stubborn inflation, which could potentially dampen economic growth and limit oil demand.

Also, unexpected data from the Energy Information Administration (EIA) revealing a substantial increase in U.S. crude inventories added further pressure on oil prices.

“The updated inventory statistics were probably the most salient price driver over the course of yesterday’s trading session,” said Tamas Varga, an analyst at PVM.

Crude inventories surged by 7.3 million barrels to 460.9 million barrels, significantly exceeding analysts’ expectations and casting a shadow over market sentiment.

However, the tide began to turn as ceasefire talks between Israel and Hamas gained traction, offering a glimmer of hope for stability in the volatile Middle East region.

The prospect of a ceasefire agreement, spearheaded by Egypt, injected optimism into the market, offsetting concerns surrounding geopolitical tensions.

“As the impact of the U.S. crude stock build and the Fed signaling higher-for-longer rates is close to being fully baked in, attention will turn towards the outcome of the Gaza talks,” noted Vandana Hari, founder of Vanda Insights.

The potential for a resolution in the Israel-Hamas conflict provided a ray of hope, contributing to the positive momentum in oil markets.

Despite the optimism surrounding ceasefire talks, tensions in the Middle East remain palpable, with Israeli Prime Minister Benjamin Netanyahu reiterating plans for a military offensive in the southern Gaza city of Rafah.

The precarious geopolitical climate continues to underpin volatility in oil markets, reminding investors of the inherent risks associated with the commodity.

In addition to geopolitical developments, speculation regarding U.S. government buying for strategic reserves added further support to oil prices.

With the U.S. expressing intentions to replenish the Strategic Petroleum Reserve (SPR) at prices below $79 a barrel, market participants closely monitored price movements, anticipating potential intervention to stabilize prices.

“The oil market was supported by speculation that if WTI falls below $79, the U.S. will move to build up its strategic reserves,” highlighted Hiroyuki Kikukawa, president of NS Trading, owned by Nissan Securities.

As oil markets navigate a complex web of geopolitical uncertainties and supply dynamics, the recent rebound underscores the resilience of the commodity in the face of adversity.

While challenges persist, the renewed optimism offers a ray of hope for stability and growth in the oil sector, providing investors with a semblance of confidence amidst a volatile landscape.

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Gold

Gold Soars as Fed Signals Patience

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Gold emerged as a star performer as the Federal Reserve adopted a more patient stance, sending the precious metal soaring to new heights.

Amidst a backdrop of uncertainty, gold’s ascent mirrored investors’ appetite for safe-haven assets and reflected their interpretation of the central bank’s cautious approach.

Following the Fed’s decision to maintain interest rates at their current levels, gold prices surged toward $2,330 an ounce in early Asian trade, building on a 1.5% gain from the previous session – the most significant one-day increase since mid-April.

The dovish tone struck by Fed Chair Jerome Powell during the announcement provided the impetus for gold’s rally, as he downplayed the prospects of imminent rate hikes while underscoring the need for further evidence of cooling inflation before considering adjustments to borrowing costs.

This tempered outlook from the Fed, which emphasized patience and data dependence, bolstered gold’s appeal as a hedge against inflation and economic uncertainty.

Investors interpreted the central bank’s stance as a signal of continued support for accommodative monetary policies, providing a tailwind for the precious metal.

Simultaneously, the Japanese yen surged more than 3% against the dollar, sparking speculation of intervention by Japanese authorities to support the currency.

This move further weakened the dollar, enhancing the attractiveness of gold to investors seeking refuge from currency volatility.

Gold’s ascent in recent months has been underpinned by a confluence of factors, including robust central bank purchases, strong demand from Asian markets – particularly China – and geopolitical tensions ranging from conflicts in Ukraine to instability in the Middle East.

These dynamics have propelled gold’s price upwards by approximately 13% this year, culminating in a record high last month.

At 9:07 a.m. in Singapore, spot gold was up 0.3% to $2,326.03 an ounce, with silver also experiencing gains as it rose towards $27 an ounce.

The Bloomberg Dollar Spot Index concurrently fell by 0.3%, further underscoring the inverse relationship between the dollar’s strength and gold’s allure.

However, amidst the fervor surrounding gold’s surge, palladium found itself trading below platinum after dipping below its sister metal for the first time since February.

The erosion of palladium’s long-standing premium was attributed to a pessimistic outlook for demand in gasoline-powered cars, highlighting the nuanced dynamics within the precious metals market.

As gold continues its upward trajectory, investors remain attuned to evolving macroeconomic indicators and central bank policy shifts, navigating a landscape defined by uncertainty and volatility.

In this environment, the allure of gold as a safe-haven asset is likely to endure, providing solace to investors seeking stability amidst turbulent times.

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Crude Oil

Oil Prices Steady as Israel-Hamas Ceasefire Talks Offer Hope, Red Sea Attacks Persist

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Amidst geopolitical tensions and ongoing conflicts, oil prices remained relatively stable as hopes for a ceasefire between Israel and Hamas emerged, while attacks in the Red Sea continued to escalate.

Brent crude oil, against which Nigerian oil is priced, saw a modest rise of 27 cents to $88.67 a barrel while U.S. West Texas Intermediate crude oil gained 30 cents to $82.93 a barrel.

The optimism stems from negotiations between Israel and Hamas with talks in Cairo aiming to broker a potential ceasefire.

Despite these diplomatic efforts, attacks in the Red Sea by Yemen’s Houthis persist, raising concerns about potential disruptions to oil supply routes.

Vandana Hari, founder of Vanda Insights, emphasized the importance of a concrete agreement to drive market sentiment, stating that the oil market awaits a finalized deal between the conflicting parties.

Meanwhile, investor focus remains on the upcoming U.S. Federal Reserve’s policy review, particularly in light of persistent inflationary pressures.

Market expectations for any rate adjustments have been pushed out due to stubborn inflation, potentially bolstering the U.S. dollar and impacting oil demand.

Concerns over demand also weigh on sentiment, with ANZ analysts noting a decline in premiums for diesel and heating oil compared to crude oil, signaling subdued demand prospects.

As geopolitical uncertainties persist and market dynamics evolve, observers closely monitor developments in both the Middle East and global economic policies for their potential impact on oil prices and market stability.

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