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Nigeria’s Crude Production to Drop by 43,775 Barrels Next Year

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  • Nigeria’s Crude Production to Drop by 43,775 Barrels Next Year

Nigeria’s crude oil production would drop to 43,775 barrels per day, following the decision by the Organisation of Petroleum Exporting Countries (OPEC) to cut Nigeria’s production to 800,000 barrels at its meeting in Vienna, last Friday.

Other OPEC members expected to cut their production volumes as follows: Algeria with October production level at about 1.07 mbpd (26,750 barrels); Angola, 1.457mbpd (36.43 barrels); Congo, 324,000bpd (8,100 barrels), Ecuador, 525,000 (13,125 barrels); Equatorial Guinea, 131,000 bpd (3,275 barrels); Gabon 186,000 bpd (4,650 barrels) and Iran, 3.296 mbpd (82,400 barrels).

Iraq, which produced 4.653 mbpd in October will cut about 116,325 barrels; Kuwait 2,.764mbpd (69,100 barrels); Libya, 1.114 mbpd (27,850 barrels); Saudi Arabia 10.642mbpd (266,050 barrels); United Arab Emirate 3.160 mbpd (81,750 barrels) and Venezuela 1.171 mbpd (29,275 barrels).

But, a communique at the end of the 175th meeting of the 15-member oil group in Vienna, Austria on Friday said the cut was subject to a review in April 2019.

In the communique, OPEC said the latest cut, which would help stabilise and strengthen crude oil prices at the international oil market, would be based on members’ October oil production levels.

Nigeria has consistently been producing below the 2.3 million barrels daily benchmark in the approved budgets, since 2016.

The latest cut will further reduce the output level by 43,775 barrels, in line with Friday’s resolution.

OPEC’s secretariat production data of member countries contained in the latest monthly oil market report published on Friday showed Nigeria’s daily oil production has maintained a low profile for years.

After Niger Delta militants attacked oil facilities in 2015, cutting the country’s oil production by almost 50 per cent, the capacity has crawled slowly from an average of 1.6 million barrels in 2016 to about 1.7 million barrels in 2017 and 2018.

In September, OPEC’s secretariat secondary sources put Nigeria’s daily production capacity at about 1.768 million barrels, before dropping by about 17,000 barrels to 1.751 million barrels in October.

But, direct communication sources, according to the group’s monthly report, gave the figure as 1.634 million barrels in September, up by about 138,000 barrels to about 1.772 million barrels in October.

Based on Friday’s resolution, which said OPEC’s latest output cut by 2.5 per cent would be based on October production levels, Nigeria’s production is expected to drop by a minimum of 43,775 barrels to about 1.71 million barrels per day, effective January 2019.

Nigeria’s representative in OPEC, Mele Kyari, told PREMIUM TIMES on Saturday there was no reason for Nigerians to worry over the impact of the cut on the country’s oil output projections.

“The OPEC decision to cut the output of members affects only Nigeria’s regular oil production, and not condensate,” Mr Kyari, who is also the general manager, Crude Oil Marketing Division of the Nigerian National Petroleum Corporation (NNPC), said.

Condensates are gas hydrocarbons, often classified as ultra-light oil, extracted in liquid form during the oil drilling process.

Although the exact volume of condensates Nigeria produces remains unknown, NNPC data seen by the Nation revealed it could be as high as 500,000 barrels per day.

The data showed the volume was as high as 511,000 barrels per day in 2011, before dropping to about 398,000 barrels in 2017.

Prior to the crucial meeting in Vienna, which later saw members reach a consensus on the latest cut, Minister of State for Petroleum Resources, Ibe Kachikwu, told Bloomberg how ”very difficult” it would be for Nigeria to cut its current daily production capacity.

The minister, however, noted that since it was the consensus by the group to act, to stabilise the market and boost prices, it was important for all members to be seen to be contributing something.

Nigeria got three exemptions from previous output cuts between January 2017 and July 2018, which allowed OPEC bring production and supply to a balance.

OPEC’s decision to cut members output followed reviews of various reports, including those of its Secretary-General, the Joint Ministerial Monitoring Committee (JMMC), the Joint Technical Committee (JTC), the OPEC Secretariat, and the Economic Commission Board.

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

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Economy

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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Economy

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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