- OPEC Projects to Tighter Oil Market in 2019
The research and analysis arm of the Organisation of Petroleum Exporting Countries pointed towards a much tighter market in 2019 as the group has seen its production fall significantly this year, led by curbs to Saudi Arabian output along with dramatic, involuntary declines from sanctions-hit Venezuela.
In its monthly oil market report, OPEC estimates demand for its crude to average 30.30 million barrels per day in 2019, a fall of 1.05 million bpd on the year, signifying that oil inventories are going to decline sharply, pointing to a very tight market.
But the group said that the market remained oversupplied and warned of slowing demand growth, according to S&P Global Platts.
Its 14 members pumped 30.02 million bpd in March, its lowest output figure since February 2015. This is 100,000 bpd lower than the call on its own crude. Demand for OPEC crude in 2018 averaged 31.35 million bpd.
The March figure is down from 30.56 million bpd in February, largely on a huge fall in production from Venezuela and Saudi Arabia.
Oil prices have recovered sharply since December, when they fell to a 15-month low, and ICE Brent has been trading a five-month high of above $71 per barrel this week.
OPEC revised demand growth down in 2019 to 1.21 million bpd due to “slower-than-expected economic activity.”
Global oil demand is estimated to average 99.91 million bpd this year, compared with 98.70 million bpd in 2018, OPEC said. The group pegged 2018 global oil demand growth at 1.41 million bpd.
OPEC also revised down non-OPEC oil supply growth in 2019 by 60,000 bpd “due to extended maintenance in Kazakhstan, Brazil and Canada.”
It said that US, Brazil, Russia, UK, Australia, Ghana, Sudan and South Sudan will be the main drivers of supply growth this year.
The group forecasts US crude production to rise by 1.46 million bpd in 2019 to 12.42 million bpd.
“The highest incremental production is expected in the Gulf Coast, albeit at a slower pace compared to a year ago due to the pipeline constraints in Permian Basin,” it added.
Venezuela reported a production figure of 960,000 bpd, down by a massive 472,000 bpd, as power outages and US sanctions cripple the South American oil producer.
Saudi Arabia’s crude output fell 289,000 bpd in March to average 9.79 million bpd, according to an average of the six secondary sources that OPEC uses to gauge production.
The kingdom also self-reported production of 9.79 million bpd, its lowest since January 2017 and a fall of 350,000 bpd month on month. That is much below its quota of 10.31 million bpd under the cut agreement.
The kingdom has decreased production by 1.30 million bpd since November when it pumped a record high of 11.09 million bpd.
At the last OPEC meeting in Vienna, the group’s members agreed to slash output by 812,000 bpd, with Russia and nine other non-OPEC allies committing to a cut of 383,000 bpd for the first six months of 2019.
Iraq’s production fell marginally to 4.52 million bpd in March, slightly above its quota of 4.51 million bpd, according to OPEC secondary sources.
In Iran, hit by US sanctions, output was slight down, falling 28,000 bpd to 2.70 million bpd in March.
Libya, which is also exempt from the deal, pumped 1.098 million bpd in March, up 196,000 bpd from the previous month, but output remains at risk as the country is on the brink of a possible civil war.
A key metric for the deal has been to lower oil inventories below the five-year average. OPEC said it had made some progress towards achieving this goal.
COVID-19: CBN Has Disbursed N83B Loans to Healthcare Sector
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday, said the central bank had disbursed over N83.9 billion to pharmaceutical and healthcare practitioners in the country since the outbreak of the COVID-19 pandemic in the country.
Also, Lagos State Governor, Mr. Babajide Sanwo-Olu, has stressed the need for a slash in the cost of governance in the country, saying a lot more resources could be dedicated towards healthcare and critical infrastructure.
They both said this yesterday, at the premiere of ‘Unmasked’, a documentary on Nigeria’s response to the pandemic held in Lagos.
Emefiele, who was represented by the CBN’s Director of Corporate Communications, Osita Nwasinobi, explained: “Building a robust healthcare infrastructure was also vital from a security perspective, as some nations had imposed restrictions on the exports of vital medical drugs as well as the use of drug patents that could aid in containing the spread of the pandemic.
“As a result, we focused our interventions in the healthcare sector on three areas. Building the capacity of our healthcare institutions supporting the domestic manufacturing of drugs by businesses, and providing grants to researchers in the medical field, in order to encourage them to develop breakthrough innovations that would address health challenges faced by Nigerians.
“In this regard, we disbursed over N83.9 billion in loans to pharmaceutical companies and healthcare practitioners, which is supporting 26 pharmaceutical and 56 medical projects across the country. We were also able to mobilise key stakeholders in the Nigerian economy through the CACOVID alliance, which led to the provision of over N25 billion in relief materials to affected households, and the set-up of 39 isolation centres across the country. These measures helped to expand and strengthen the capacity of our healthcare institutions to respond to the COVID-19 pandemic.”
According to the CBN Governor, the banking sector regulator also initiated the Healthcare Sector Research and Development Intervention Grant Scheme, which was to aid research on solutions that could address diseases such as COVID-19, and other communicable/non-communicable diseases.
He said so far, five major healthcare-related research projects were being financed under the initiative.
Speaking further on the call to increase access to health insurance, Emefiele said: “One key aspect which we would have to address is improving access to healthcare for all Nigerians. A key factor that has impeded access to healthcare for Nigerians is the prevailing cost of healthcare services.
“According to a study by World Health Organisation (WHO), only four percent of Nigerians have access to health insurance. Besides food, healthcare expenses are a significant component of average Nigeria’s personal expenditure.
“Out of pocket expenses on healthcare amount to close to 76 percent of total healthcare expenditure. At such levels of health spending, individuals particularly those in rural communities may be denied access to healthcare services.
“Expanding the insurance net to capture the pool of Nigerians not covered by existing health insurance schemes, could help to reduce the high out of pocket expenses on healthcare services by Nigerians. It will also help to increase the pool of funds that could be invested in building our healthcare infrastructure and in improving the existing welfare package of our healthcare workers.”
“The private sector has a significant role to play in this regard given the decline in government revenues as occasioned by the drop in commodity prices. Leveraging innovative solutions that can provide insurance services at relatively cheap prices could significantly help to improve access to healthcare for a large proportion of Nigerians particularly those in our rural communities.”
According to Emefiele, the CBN remains committed to working with all stakeholders in improving access to finance and credit that would support the development of viable healthcare infrastructure in our country.
On his part, Sanwo-Olu said: “What are the lessons that we have learned with the Covid-19? Looking at all the things that Covid-19 has cost us, how are we preparing ourselves?
“The truth be told the structure of our governance system needs to change particularly the cost of governance. We need to speak up and ask ourselves are we ready to change.”
“When it gets to the election it is the same set of people that will come up and people don’t come out to vote and we end up having 20 percent out of 100 percent that will elect those that will govern. So, the change has to be about all of us. That is how the real change that will help us will come,” he added.
Emefiele Says CBN Will Resist All Attempts to Continue Maize Importation
The Central Bank of Nigeria (CBN) has vowed to resist all attempts to continue the importation of maize into the country.
Godwin Emefiele, the governor, CBN, in a statement titled ‘Emefiele woos youths to embrace agriculture’, said: “the CBN would resist attempts by those who seek to continually import maize into the country.”
Emefiele, who spoke in Katsina during the unveiling of the first maize pyramid and inauguration of the 2021 maize wet season farming under the CBN-Maize Association of Nigeria Anchor Borrowers’ Programme, said maize farmers in the country had what it takes to meet the maize demand gap of over 4.5 million metric tonnes in the country.
“With over 50,000 bags of maize available on this ground, and others aggregated across the country, maize farmers are sending a resounding message that we can grow enough maize to meet the country’s demand,” Emefiele said.
He explained that the maize unveiled at the ceremony would be sold to reputable feed processors.
He added that this would in turn impact positively on current poultry feed prices, as over 60 per cent of maize produced in the country were used for producing poultry feed.
Nigeria’s Spending Structure Unsustainable, Budget Head Says
Nigeria’s current trend of spending more money on running the government than on building new infrastructure is unsustainable, the country’s top budget oversight official said.
Low revenue collection and high recurrent costs have resulted in actual capital expenditure below two trillion naira ($4.88 billion) a year for a decade, Ben Akabueze, director-general of the Budget Office, said Tuesday in a virtual presentation.
“Hence, the investments required to bridge the infrastructure gap are way beyond the means available to the government,” Akabueze said. Recurrent spending, allocated towards salaries and running costs, has accounted for more than 75% of the public budget every year since 2011, he said.
Africa’s largest economy requires at least $3 trillion of spending over the next 30 years to close its infrastructure gap, Moody’s Investors Service said in November. The country’s tax revenue as a proportion of gross domestic product is one of the lowest globally, according to the International Monetary Fund.
“Huge recurrent expenditure has constrained the provision of good roads, steady power supply, health care services, quality education and quality shelter,” Akabueze said.
Nigeria should amend its constitution to create six regions to replace the existing 36 states, which each have their own governments, Akabueze said. The country also needs to reduce the number of cabinet ministers to a maximum of 24 from more than 40 and cut federal ministries to fewer than 20 from the current 27, he said.
“No country can develop where a large part of its earnings is spent on administrative structures rather than on capital investment,” Akabueze said.
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