- Kachikwu: Nigeria’s Refining Demand May Stretch Oil Production
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has suggested that upcoming petroleum refining plants in Nigeria could place a lot of demand on the country’s oil production soon, such that it may find it difficult to meet the request of the soon-to-be completed refineries.
Kachikwu, also said the imminent recovery of refining capacity of the four refineries owned and operated by the Nigerian National Petroleum Corporation (NNPC) in Warri, Kaduna, and Port Harcourt, were part of the expected exert pressure on the country’s oil production which is currently around 2.3 million barrels per day (mb).
Government’s statistics had indicated Nigeria currently has a 445,000 barrels a day refining capacity solely accounted for by the NNPC’s four refineries.
This number is however projected to rise with the coming on stream of refineries such as the 650,000 barrels a day Dangote refinery; the Omsa Pillar Astex Company (OPAC) refinery in Delta; as well as the 12,000 barrels a day Azikel refinery, amongst others.
Kachikwu, however stated at a recent meeting at the State House in Abuja, where Nigeria and Niger Republic penned agreements to build a 150,000 barrels a day refinery in Katsina, that with crude supplies from Niger, as well as other refineries coming up, there would be little for exports.
He specifically predicted Nigeria could have challenges providing crude oil for the refineries when they all become operational.
His predictions were however supported by industry experts who suggested an immediate passage of the Petroleum Industry Governance Bill (PIGB) currently with President Muhammadu Buhari for assent, and other associate bills would pave the way for investments into more oil production and reserves increase.
“First you have the Agip refinery that studies are ongoing in Bayelsa that should cover the South-south corridor. You have the Port Harcourt refinery which when they finish refurbishing covers South-south and South-east.
“The Warri and Kaduna are all there including the Dangote in Lagos. About three marginal refineries with two coming on stream and seven with a potential of coming on stream over the next two years. Very soon our problem would be finding sufficient crude to match the requirements of a lot of these refineries,” said Kachikwu, in response to a question on refineries’ projects in the country.
He also spoke about the decision by Nigeria to partner Niger in the new border refinery project, as well as considerations for security in northern Nigeria, which has had terrorists’ attacks across its states in the last few years.
“The decision is to do a pipeline from Niger Republic into a Nigerian border town and construct a refinery with capacity probably between 100,000 and 150,000 barrels a day but it is all dependent on the Nigerien crude volumes.
“It depends on what they find, currently their number is enough to support about 60 to 70,000 barrels per day but lots of field that have been capped will be opened. We hope that as the project goes over the next two years, we will probably have more feed-stock to power a much bigger refinery,” the minister said.
He added: “It is Katsina and there is a potential for extension to Kaduna. Bear in mind this started first from wanting to build a pipeline from Niger to Kaduna refinery. At the board of NNPC we shut that down because the asset quality of the crude from Niger was not the same as our own quality crude.
“We decided to do a refinery that is targeted at the quality of their crude. The shorter the distance, the shorter the pipeline, the smaller the cost required for construction. So, that was the basis for selection.”
On concerns about insecurity, he said: “If we bother about insecurity we are not going to make progress. The security issues are there, we will deal with them. Niger hasn’t faced much of a security issue in terms of finding its crude, the distance in the pipeline corridor is going to be short and hopefully technology will bury it sufficiently not to be an issue.”
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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