Oil prices rose on Friday morning as experts predicted it could take few weeks to clear Suez Canal blockage, one of the world’s most important waterways and busiest with nearly 19,000 ships or 51.5 ships per day in 2020, according to Suez Canal Authority.
Brent crude oil, the global benchmark for the Nigerian type of oil, gained $1.16 or 1.9 percent to $63.12 per barrel following a 3.8 percent decline on Thursday.
The U.S. West Texas Intermediate (WTI) crude oil rose by $1.25 or 2.1 percent to $59.81 per barrel, also after a 4.3 percent decline on Thursday.
Suez Canal blockade, one of the world’s busiest shipping channels for oil, grain and other commodities between Asia and Europe, may not be operational for weeks.
Therefore, officials have started stopping all ships from entering the canal on Thursday, according to a source familiar with the situation.
“Expectations that the blockage of the Suez Canal may last for weeks raised fears of supply tightness in oil markets,” said Nissan Securities researcher Yasushi Osada.
Also, the growing concerns regarding a fresh wave of lockdowns in Europe and other parts of the world drag on oil demand as factories are expected to shutdown with COVID-19 vaccine suspension in the Euro-area and rising wave of a new type of COVID-19.
“But lingering worries that a fresh wave of lockdowns in Europe and elsewhere may slow a recovery of global fuel demand are expected to limit price gains,” Osada said.
Nigeria Sets Up N20B Oil Sector Research Fund
The minister of State for Petroleum Resources, Timipre Sylva, has launched a US$50 million Nigerian Content Research and Development (R&D) fund, this is seen as a breath of fresh air in a country where funding for research has been lacking.
The launching of the fund by the Nigerian Content Development and Monitoring Board (NCDMB) was also an occasion for the commissioning of the Board’s Technology Incubation and Innovation Center located within the Board’s Tower in Yenogoa, Bayelsa.
The minister said through a representative said the fund would be used to create research centers of excellence, finance research commercialisation, funding support for basic and applied research and endowment of professorial chairs in universities and research institutions in the country.
Nigeria spends only about 0.2 percent of its Gross Domestic Product on research and development annually as against developed and some developing countries that spend between 2.5 to 4 percent and between 0.7 and to 1.2 percent of their annual GDP respectively on research and development.
Sylva said that the continued underfunding of research and development in Nigeria has continued to reflect on the country’s overdependence on foreign goods and services.
”This is unsustainable if we are serious about building a national technological capability that will drive economic growth,” he said.
The minister, therefore, urged oil and gas operating and service companies and other members of the private sector to embrace investment in R&D as a key component of their business model in order to complement the NCDMB effort.
While commissioning the Technology Incubation and Innovation Center, Sylva said that the center will provide a formidable platform for the generation, incubation and acceleration of innovative ideas to the world marketplace.
He said innovations start from the creation of ecosystems where ideas can connect and challenged various industry stakeholders and youths to utilize the Center to solidify adaptation of existing solutions and also create new solutions that address major industry challenges in the country.
Sylva reconstituted the Nigerian Content Research and Development Council, NCRDC. The council consists of delegates from three key groups including the Government, Industry and Academia.
The council offers policies that shape the direction of NCDMB’s research interventions with a membership that includes representatives of the Petroleum Technology Association of Nigeria, PETAN, Oil Producers Trade Section, OPTS and the Petroleum Contractors Trade Section, PCTS.
Other statutory members include the National Universities Commission, NUC, the National Board for Technology Incubation, NBTI and the National Office for Technology Acquisition and Promotion, NOTAP.
Speaking earlier during his presentation, Simbi Kesiye Wabote, the Executive Secretary of NCDMB, noted that research and development are integral to the growth and development of any nation as it plays an important role in opening new chapters of modern life.
Wabote however regretted that African nations accounted for less than 1 percent of what is spent on R&D globally, adding that the continent’s aggregate GDP is only 3 percent of the global GDP.
“There is a nexus between what is spent on research and development and economic prosperity. It is time to start nurturing the growth of our home-grown technology rather than just being a wholesome consumer of other people’s innovation,” he said.
According to Wabote, another reason NCDMB is channeling its efforts on research and development is that it is one of the six parameters which are essential for sustainable local content practice.
Other five parameters for sustainable local content development according to him include an enabling regulatory framework, periodic gap analysis, structured capacity building and fiscal and monetary incentives to attract new investments and keep existing businesses afloat as well as create access to the market to enhance patronage of goods and services generated from established capacities.
He further explained that another reason the Board is promoting research and development in the oil and gas industry is that it is in line with the provisions of the Nigerian Oil and Gas Industry Content Development, NOGICD, Act of 2010.
“The authors of the Nigerian Oil and Gas Industry Content Development Act of 2010 recognized the importance of Research and Development and included key provisions in the Act. Specifically, Sections 36, 37, 38, and 39, of the NOGICD Act are dedicated to promoting Research and Development,” Wabote said.
He also noted that research and development is a major feature of the Board’s 10-Year Strategic roadmap that seeks to increase the level of Nigerian content in the oil and gas industry to 70 percent by the year 2027.
He said, “The 10-Year Roadmap consists of five pillars and four enablers. The pillar on Technical Capability Development contains initiatives to further drive the delivery of Research and Development in the oil and gas industry.
The enabler on research and statistics cover the initiatives required to conduct research in key areas to generate new evidence to address industry knowledge gaps and operational challenges.”
Wabote said the Board would soon embark on a roadshow to showcase its research and development initiatives to the various stakeholder groups in the country, including universities that represent a key constituency; saying that the Board was set to move fully into the implementation phase of its initiatives to derive better results from the intellect of Nigerians in the academia, research institutions, and technology hubs.
Oil Rises on Supply Concerns as Hurricane Ida Disrupts Global Oil Market
Crude oil gained on Monday amid concerns output from the United States, the world’s largest oil producer may remain below usual level given damages done by Hurricane Ida three weeks ago.
Brent crude oil, against which Nigerian crude oil is priced, gained 62 cents or 0.9 percent to $73.54 a barrel at 11:56 am Nigerian time while the U.S West Texas Intermediate (WTI) crude oil appreciated by 64 cents or 0.9 percent to $70.36 per barrel.
Brent crude oil has remained in range, trading between $70 and $74 per barrel in the last three weeks, a position expected by most oil experts to be maintained in the near-term.
“Oil prices may not have much room to rise in the near term, but at the same time are not expected to crash soon,” said Stephen Brennock of broker PVM.
Last week, in a report released by th U.S. Energy Information Administration (EIA), the administration said it expects Brent crude oil to remain around current levels for the rest of 2021, averaging $71 a barrel in the fourth quarter of the year.
“Markets still need clarity on the virus impacts beyond the very near term and until we get that, it seems like most assets, including oil, may continue to drift sideways,” Howie Lee, an economist at Singapore’s OCBC bank.
Oil Rallies Towards $73 on Tight U.S. Supplies, Biden-Xi Call
Oil rose towards $73 a barrel on Friday, supported by growing signs of supply tightness in the United States as a result of Hurricane Ida and as U.S.-China trade hopes gave riskier assets a boost.
About three-quarters of the U.S. Gulf’s offshore oil production, or about 1.4 million barrels per day, has remained halted since late August.
Figures this week showed U.S. crude inventories fell to the lowest since September 2019.
“With the restart in offshore crude production lagging, the odds are that the Ida effect will still be felt in the coming weeks,” said Stephen Brennock of oil broker PVM.
Oil and equity markets also got a boost from news of a call between U.S. President Joe Biden and his Chinese counterpart Xi Jinping. The call raised hopes for warmer relations and more global trade, analysts said.
“The Biden-Xi phone call has had the same effect on oil markets as it has on other asset classes,” said Jeffrey Halley, analyst at brokerage OANDA.
Brent was on track to end the week with a small gain and has rallied almost 40% this year, driven by supply cuts by the Organization of the Petroleum Exporting Countries and some demand recovery from the pandemic.
On Thursday, both crude contracts had fallen more than 1% after China said it would release crude oil reserves via public auction to help ease high feedstock costs for refiners, a move described as a first.
In focus next week will be revisions to the oil demand outlook for 2022 from OPEC and the International Energy Agency, and whether the spread of the Delta variant of COVID-19 delays a full return to 2019 demand levels.
Government4 weeks ago
Buhari Approves Review of 368 Grazing Reserves in 25 States
Naira2 weeks ago
Naira Plunges Further, Exchanges at N530 to U.S Dollar
Fintech4 weeks ago
Bamboo, Trove, Risevest React To CBN Freeze Order, Assures Investors ‘Your Funds Are Safe and Secured’
Fintech4 weeks ago
CBN Granted Order To Freeze Trove, Bamboo, Others Accounts For 180 days
News2 weeks ago
Buhari Terminates Appointment of Power and Agriculture Ministers
Economy3 weeks ago
Nigeria Economy Grows 5% In Second Quarter, Its Third Consecutive Growth
Energy3 weeks ago
NNPC Made A Net Profit of N287B in 2020 – Buhari
Banking Sector3 weeks ago
Zenith Bank Launches Intelligent Chatbot, ZiVA