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Goldman Sachs Says Crude Oil Prices Could Hit $65 Per Barrel in 2021

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Goldman Sachs Says Crude Oil Prices Could Hit $65 Per Barrel in July 2021

Goldman Sachs, one of the world’s leading investment banks, has said crude oil prices could rise to $65 per barrel in the second half of the year in July given the present tight oil market and the gradual rebound in demand.

The investment bank disclosed in a note on Sunday after U.S government data showed a deficit of 2.3 million barrels per day in the final quarter of 2020 and lower supplies from crude oil producers outside the OPEC+ group.

The bank predicted a deficit of 900,000 barrels per day in the first half of 2021, up from the 500,000 barrels per day it previously predicted.

Goldman said this could boost Brent crude oil, a Nigerian type of oil, to $65 a barrel by July, with less industry investment in supply skewing risks to the upside in 2022, the bank said. Brent rose above $57 on Tuesday.

We are moderating the demand rebound to account for a slower start of vaccination and a cautious pace of reopening, leading in particular to a slower recovery in jet demand,” Goldman said.

The bank predicted that demand for crude oil will rise by 5.3 million barrels per day in the six months to July 2021, lower than the 6.8 million barrels per day previous forecast.

This is after Saudi Arabia announced that it would make an additional 1 million barrels per day cut in February and March, while the rest of OPEC plus agreed to maintain the current production level.

The nature of the latest OPEC+ agreement will also contribute to this fast tightening market as higher demand this spring will stress the ability of producers to restart production,” Goldman said.

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.

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South Sudan Launches First-Ever Oil and Gas Licensing Round

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South Sudan’s Ministry of Petroleum (MoP) officially launched the country’s first-ever oil and gas licensing round in Juba on Wednesday; Hosted by the MoP and attended by industry executives and international stakeholders, the event signifies an historic moment in the country’s budding oil and gas sector; The launch precedes the country’s highly anticipated national energy conference, South Sudan Oil & Power 2021, organized by Energy, Capital & Power and taking place at the Crown Hotel in Juba on the 29th-30th June.

South Sudan’s Ministry of Petroleum (MoP) officially launched the country’s first-ever oil and gas licensing round in an inaugural event on Wednesday in Juba. Focused on accelerating exploration and production at new and existing blocks, and promoting the country as a competitive investment destination, the event signified an historic moment in the country’s competitive oil and gas sector.

The event was officially launched by Hon. Puot Kang Chol, Minister of Petroleum, where presentations were given by Hon. Awow Daniel Chuang, Undersecretary, MoP and Hon. Athian Ding Athian, Minister of Finance and Economic Planning, with closing remarks by H.E. James Wani Igga, Vice-President and VP of the Economic Cluster, TGNU. With emphasis placed on political improvements, the improved legal framework, and the ongoing acquisition of new data, the launch has reaffirmed the country’s commitment to advancing the sector.

“Oil licensing is a proof of stability and progress in South Sudan. These blocks are part of a vision for lasting peace in the country and we want to open up the energy sector for investment. The Ministry of Petroleum has identified new exploration blocks with potential hydrocarbons for investors, operators, and other parties. We are inviting genuine investors and as mentioned in our Petroleum Act, we will try our best to be transparent,” stated Hon. Puot Kuang Chol.

“It is high time for us to help maximize the natural resources we have, and I applaud the MoP for what they are doing. The oil industry has had its ups and downs, but it is about time that these resources benefit the community, and everyone gets their rightful entitlement of the development that is taking place in South Sudan,” stated Hon.. Athian Ding Athian.

The newly launched licensing round aims to attract international investors and partners to help expand South Sudan’s exploration initiatives. Built against a backdrop of peace and stability, the new licensing round aims to attract investors, while ensuring sustainable developments and community benefits.

“Certainly, one can say with confidence that South Sudan is doing well in maintaining peace and implementing peace agreements. For the first time we can really promote investment. The country needs to rigorously enforce transparency and good governance. We need accountability to improve. I am glad that with this new licensing round, the whole country will benefit,” stated H.E. James Wani Igga.

Additionally, the launch meticulously outlined the licensing process and schedule, providing insight into new and available blocks, technical capabilities and data. By detailing crucial analytical data and information to assist operators and investors, the launch emphasized that South Sudan is officially open for business, and accordingly, is welcoming investors to its competitive sector.

“Most of the areas being licensed had previously not been explored properly in terms of seismic data due to complications from the war. In 2019, we contracted PETROTECH to help with the data. The absence of data previously made it difficult to conduct licensing rounds, however, this licensing round today allows South Sudan to conduct a transparent tendering process with trustworthy data that is available,” stated Hon. Awow Daniel Chuang.

According to the MoP, the Ministry will use stringent criteria in its facilitation of the bid evaluation and investor selection process. With the offered blocks falling between longitudes 25 and 36 and between latitudes 4 and 11, and the size of blocks ranging between 4,000 and 25,000km², the licensing round is expected to be highly competitive. Additionally, the MoP is emphasizing the role of Nilepet in facilitating growth across the industry.

“If you look at the producing blocks today, the percentage of Nilepet has gone to 10% equity. We want investors but we also want to promote the capacity of Nilepet as the national oil company,” continued Hon. Puot Kang Chol.

The newly launched licensing round will be expanded on at the South Sudan Oil & Power (SSOP) 2021 conference, organized by Energy Capital & Power and endorsed by the Ministry of Petroleum. The Ministry will unpack the exploration of new blocks, existing blocks and will explain how it will further explore already producing areas.

Taking place at the Crown Hotel in Juba on the 29th-30th June, SSOP 2021 is expected to drive investment, promote engagement, and accelerate growth within South Sudan’s oil and gas sector.

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Brent Crude Oil Crosses $75 Per Barrel as Global Demand Recovers

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Crude oil prices sustained bullish runs amid rising demand for global oil and likely delay in Iranian crude supply to global oil market.

Brent crude oil, global benchmark for Nigerian oil, rose above $75 a barrel for the first time since 2019 on Tuesday as global investors remained bullish across the board.

Brent crude rose 26 cents or 0.4 percent to $75.16 a barrel as of 7 am Nigerian time on Tuesday.

The rebound has pushed up spot premiums for crude in Asia and Europe to multi-month highs.

“The market sentiment stays strong with improved outlook for global demand,” said Satoru Yoshida, a commodity analyst with Rakuten Securities, adding that a rally in Asian stock markets is also helping boost risk appetite among investors.

Global shares extended their recovery on Tuesday, with Asian markets bouncing from four-weeks lows as investor focus on economic growth partly offset worries about the U.S. Federal Reserve raising rates sooner than expected.

BofA Global Research raised its Brent crude price forecasts for this year and next, saying that tighter oil supply and recovering demand could push oil briefly to $100 per barrel in 2022.

Investors are looking to weekly U.S. inventory data as crude oil stockpiles have fallen for four weeks, said Toshitaka Tazawa, analyst at commodities broker Fujitomi Co.

U.S. crude stocks were expected to drop for the fifth consecutive week, while distillate and gasoline were seen rising last week, a preliminary Reuters poll showed on Monday.

“The oil prices are expected to hold a firm tone amid expectations that fuel demand will pick up quickly along with economic recovery in Europe and the United States,” Tazawa said.

The price gap between the world’s two most actively traded oil contracts narrowed to its lowest in more than seven months, demonstrating that U.S. oil output is still in the COVID-19 doldrums with the market likely to remain undersupplied.

Negotiations to revive the Iran nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won the country’s presidential election.

Raisi on Monday backed talks between Iran and six world powers to revive a 2015 nuclear deal but flatly rejected meeting U.S. President Joe Biden, even if Washington removed all sanctions.

“The lower probability of Iranian crude oil returning to the market due to the new hardline president is also supporting the market,” Fujitomi’s Tazawa said.

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FG Earned $34.22B From Crude Oil and Gas in 2019 – NEITI

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The Nigeria Extractive Industries Transparency Initiative (NEITI) on Thursday released its 2019 oil and gas industry audit report, which shows that Nigeria earned N34.22 billion from the oil and gas industry in 2019.

The audit, conducted by Adeshile Adedeji & Co. (Chartered Accountants), an indigenous accounting and auditing firm, reconciled payments from 98 entities. They include 88 oil and gas companies, nine government agencies and the Nigerian Liquefied Natural Gas (NLNG).

The 2019 figure is an increase of 4.88 percent over the $32.63billion revenue realised from the sector in 2018. A breakdown of the earnings showed that payments by companies accounted for $18.90billion, while flows from federation sales of crude oil and gas accounted for $15.32billion.

The report further showed that 10 years (2010-2019) aggregate financial flows from the oil and gas sector to government amounted to $418.544billion, with the highest revenue flow of $68.442 recorded in 2011, while the lowest revenue flow of $17.055 was recorded in 2016.

According to NEITI, the total crude oil production in 2019 was 735.244mmbbls, representing an increase of 4.87 percent over the 701.101mmbbls recorded in 2018. Production sharing contracts (PSCs) contributed the highest volumes of 312.042mmbbls followed by Joint Venture (JV) and Sole Risk (SR) which recorded 310,284mmbbls and 89.824mmbbls respectively. Others are Marginal Fields (MFs) and Service Contracts (SCs) which accounted for 21,762mmbbls and 1,330mmbbls respectively.

The report also showed that total crude oil lifted in 2019 was 735.661mmbbls, indicating a 4.93 percent increase to the 701.090 mmbbls recorded in 2018, with companies lifting 469.010mmbbls, while 266.650mmbbls was lifted by the Nigeria National Petroleum Corporation (NNPC) on behalf of the federation.

Analysis of crude oil lifted by NNPC showed that 159.411mmbbls was for export, while 107.239mmbbls was for domestic refining. 97 percent of the volumes for domestic refining (104.475mmbbls) was utilised for the Direct Sale Direct Purchase (DSDP) programme while the remaining 3 percent (2.764mmbbls) was delivered to the refineries.

NEITI reported that the value of the 2019 domestic crude oil earnings was N2.722 trillion. Of this figure, N518.074billion was deducted for Petroleum Motor Spirit (PMS) under-recovery by the NNPC.

This figure was N213.074billon above the approved sum of N305billion for under-recovery in 2019. Similarly, the sum of N126.664billion was incurred by the Corporation as costs for pipeline repairs and maintenances which showed a difference of N96.378billion from the approved sum of N30.287billion for that purpose.

The report also pointed out that N31.844billion was also deducted for crude and product losses due to theft.

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