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Nigeria Produced Above OPEC Oil Quota in Feb – Report

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  • Nigeria Produced Above OPEC Oil Quota in Feb – Report

Nigeria, Africa’s top oil producer, pumped more crude oil in February than the quota given by the Organisation of Petroleum Exporting Countries, a new survey has shown.

OPEC and 10 non-OPEC countries agreed in December to cut oil production by 1.2 million barrels per day effective from January for an initial period of six months to help balance the market and support prices.

Nigeria, which was exempted from the previous production cuts deal, agreed to a quota under the current accord. With a reference level of 1.738 million bpd, the country was given a new quota of 1.685 million bpd.

But Nigeria pumped 1.88 million bpd in February, 190,000 bpd above its cap, S&P Global Platts’ survey of industry officials, analysts and shipping data found.

The country has started production from a new deepwater field, Egina, though the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has suggested that he might seek to have those barrels classified by OPEC as condensates, which is not subject to the quotas.

Nigeria also considers Agbami grade as a condensate, while S&P Global Platts and some other secondary sources used by OPEC to monitor production classify it as crude.

The nation’s crude oil production including condensates fell to 1.999 million bpd in January from 2.081 million bpd in December, according to the Ministry of Petroleum Resources.

President Muhammadu Buhari said last month that the country could consider a reduction in crude oil production in support of efforts to shore up the price of the commodity.

He said, “As a responsible member of the Organisation of Petroleum Exporting Countries, Nigeria was willing to go along with the Saudi initiative in limiting output so that prices would go up.”

The 2019 budget proposal, presented to the National Assembly on December 19 by President Buhari, was based on oil production of 2.3 million bpd (including condensates), with an oil benchmark price of $60 per barrel.

OPEC’s crude oil production in February modestly declined to 30.80 million bpd in February, the survey showed.

The figure is a 60,000 bpd drop from January and is the group’s lowest output level since March 2015, when Gabon, Equatorial Guinea and Congo had yet to join the organisation but Qatar was still a member.

Despite the fall, OPEC still has more cutting to do to fully comply with its supply accord that went into force in January. The 11 members with quotas under the deal achieved 79 per cent of their committed cuts in February, and remain 170,000 bpd above their collective ceiling. This is a slight improvement on January’s 76 per cent, with Nigeria and Iraq producing far in excess of their cap, according to Platts calculations.

Iraq produced 4.67 million bpd in February, according to the survey, 160,000 bpd above its quota.

The country has consistently lagged in compliance with its committed cap, both under the current deal and under the previous accord, which ran from 2017 to 2018.

Iraqi officials have sought exemptions from the deal, saying their war-torn country needed oil revenues to rebuild from its devastating fight against the Islamic State. But other members have pressured the country -largely to no avail – to conform to its quota.

Libya, which this week lifted the force majeure at its 300,000 bpd Sharara field after almost three months, pumped 870,000 bpd in February, a slight rise from January, according to the survey.

The first cargoes of Sharara crude since production restarted are expected to be lifted this weekend.

Venezuela and Iran, both under US sanctions, and Libya, where instability continues to impact output, are exempt from the deal.

The February output figures will be reviewed by a six-country monitoring committee of the OPEC/non-OPEC coalition, which meets on March 18 in Azerbaijan to discuss market conditions and assess compliance with the deal. The committee is co-chaired by Saudi Arabia and Russia.

Saudi Arabia, OPEC’s largest producer, has made good on its pledge to lead the coalition by example, slashing its output to 10.15 million bpd in February, the survey found. That is 160,000 bpd below its quota of 10.31 million bpd and the kingdom’s lowest output level since May 2018.

Venezuela, whose oil production has been declining for years due to underinvestment, technical problems and labour issues, pumped 1.10 million bpd in February, down 60,000 bpd month-on-month, as it has struggled to sell its crude since US sanctions were imposed in late January.

Iran managed to keep production steady in February, at 2.72 million bpd, the survey found, as several buyers in the month took advantage of sanctions waivers the US granted to eight countries to purchase Iranian crude.

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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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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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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