- Kenya Joins League of Oil Exporting Countries as Controversy Brews Over Revenue Sharing
Kenya has joined the league of oil-exporting countries after it exported its first crude oil to Malaysia on Monday in a ceremony flagged off by Kenyan President, Uhuru Kenyatta.
The crude oil, 200,000 barrels, was bought by a Chinese Company –Chemchina UK Ltd — and was sold for Sh1.2 billion.
The President, during the flagging off of the country’s maiden oil exportation, said, “The first export of crude oil by our nation, therefore marks a special moment in our history as a people and as a country
“There are special moments that mark a turning point in the destiny of our nation,” he said.
Following the sale, local leaders have called for equitable distribution of revenue to ensure that all citizens benefit from the sale.
Earlier in March, President Kenyatta signed into law, a bill which regulates oil exploration and production. It also provides guidelines on how revenues generated from the sale of crude oil, should be shared amongst the government, local communities and companies.
The law allocates 75 per cent to the central government, 20 per cent to local government and 5 per cent to local communities where the oil was discovered. The 5 per cent was a reduction from the initial 10 per cent allocated to local communities.
The law, however, requires that the percentages be reviewed after a 10-year period.
The law was originally established for production on a large scale but was stalled by a feud amongst tiers of government and impoverished Turkana indigenes in the northern region; on whose soil the oil was discovered.
The revenue distribution has popularly being referred to as ‘the sharing of a goat’ by the President himself, some governors and an oil executive.
Turkana County Deputy Governor, Peter Emuria Lotethiro who believes the ‘leg of the goat’ should be given to Turkana said; “When you slaughter a goat, the owner of the goat is left with the leg; Turkana wants the leg.”
London based Tullow Oil, also indicated its interest in a piece of ‘the goat’.
Its Chief Executive, Paul McDade, said: “Having spent $2 billion, the joint venture partners will be able to get a bit of that goat. There is much more investment to come which will create jobs across Kenya”
The company also revealed that the Turkana field produces about 560 million barrels of oil and that by 2022; the field should produce an estimated 100,000 barrels per day.
Tullow and Partner African Oil were the first explorers to discover commercial oil reserves in Turkana’s Lokichar basin in 2012.
Crude Oil Dips Slightly on Friday Amid Demand Concerns
On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.
Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.
Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.
The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.
This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.
Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.
Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.
While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.
Nigeria’s Petrol Imports Decrease by 1 Billion Litres Following Subsidy Removal
Nigeria’s monthly petrol imports declined by approximately 1 billion litres following the fuel subsidy removal by President Bola Ahmed Tinubu, the National Bureau of Statistics (NBS) reported.
The NBS findings illuminate the tangible effects of this policy shift on the country’s petroleum importation dynamics.
Prior to the subsidy removal, the NBS report delineated a consistent pattern of petrol imports with quantities ranging between 1.91 billion and 2.29 billion litres from March to May 2023.
However, in the aftermath of Tinubu’s decision, the nation witnessed a notable downturn in petrol imports, with figures plummeting to 1.64 billion litres in June, the first post-subsidy month.
This downward trend persisted in subsequent months, with July recording a further reduction to 1.45 billion litres and August witnessing a significant decline to 1.09 billion litres.
August’s import figures represented a decrease of over 1 billion litres compared to the corresponding period in 2022.
The NBS report underscores the pivotal role of the subsidy removal in reshaping Nigeria’s petrol import landscape with the Nigerian National Petroleum Company emerging as the sole importer of fuel in the current scenario.
Despite higher petrol imports in the first half of 2023 compared to the previous year, the decline in June, July, and August underscores the profound impact of subsidy removal on import dynamics, affirming the NBS’s latest findings.
Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.
Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.
Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.
He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.
Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.
The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.
Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.
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