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Seplat Energy Excited On The passage of PIB, Foresee Opportunists For More Investment

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Nigeria’s biggest oil and gas exploration and production company, Seplat Energy Plc, said it hopes the passage of the country’s long-awaited Petroleum Industry Bill by lawmakers will spur investment into the country’s petroleum industry.

“The PIB in place gives everyone the visibility of what the new roles are, so we’re excited,” CEO Roger Brown said in an interview in Lagos. “People know what the rules are and can invest more.”

The bill, which took about two decades of deliberation, is expected to remove legal and regulatory uncertainty that’s held back the growth of the oil and gas sector once it gets signed into law by Nigeria’s President Muhammadu Buhari.

Although, some aspects of the bill are “negative” to the operations of Seplat, on a balance it’s positive to the company’s operations, according to Brown. The governors from the nation’s southern states have demanded a review of some provisions in the legislation including the share of oil revenue that will go to host communities.

As an indigenous oil and gas company, Seplat will continue to invest in Nigeria even without the new law, Rogers said. “What excites me most is that we’ll have stability, and the legislation as passed is key.”

The firm is looking for “onshore and shallow water’’ assets for acquisition, according to the CEO. It is targeting offers from the international oil companies divesting from the country as well as local firms selling their “quality” assets, he said.

Speaking on gas expansion saddled with the increasing uncertainty over future demand for oil and the shift to renewables globally, Seplat plans to focus on gas to drive future income and profitability.

As reported on Bloomberg, the company, listed in London and Lagos, changed its name last month to Seplat Energy from Seplat Petroleum to reflect a transition to a full energy solutions provider. It plans to increase gas investments to shore up its contribution to revenue to as much as 50 percent by the next five years from 30 percent and probably overtake oil at some point, according to the chief executive.

“Gas will be the baseload which will launch the springboard into renewable energy and renewable energy must be part of Nigeria’s future,” Brown said.

Africa’s biggest economy is trying to shift away from its reliance on crude oil by encouraging investments to develop its more than 200 trillion cubic feet of proven gas reserves to power manufacturing and electricity industries, even as it aims for net-zero emissions in the future. It pledged to cut carbon emissions by 20 percent by 2030 under the Paris Climate Agreement.

“In five years, oil will be relevant; in 30 years I think gas is going to be more relevant into the future,” Brown said. “Developing gas is very critical.”

Seplat is looking to deliver ANOH, a key gas-processing plant, with a daily capacity of 300 million standard cubic feet by the first half of next year, then plan an expansion of the project, Brown said.  He also affirmed that the company is in talks with governments in the country’s southeast, as well as Waltersmith, a private oil company, on ways to develop the gas market in the area.

“We firmly believe there’s big gas demand in the country but you have to make sure your market is there,” the CEO said. “We see ourselves as a company, among others, that will develop the domestic gas market.”

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Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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Oil Prices Steady Amid Mixed Signals on Crude Demand

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Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.

Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.

The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.

Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.

Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.

“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.

However, rising jobless claims signal potential economic easing, which could dampen crude demand.

John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.

Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.

Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.

An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.

Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.

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Oil Prices Slide on China Demand Concerns, Brent Falls to $83.73

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Oil prices declined on Tuesday for the third consecutive day on growing concerns over a slowing Chinese economy and its impact on global oil demand.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.12, or 1.3% at $83.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.15, or 1.4%, to close at $80.76.

The dip in oil prices is largely attributed to disappointing economic data from China, the world’s second-largest economy.

Official figures revealed a 4.7% growth in China’s GDP for the April-June period, the slowest since the first quarter of 2023, and below the forecasted 5.1% growth expected in a Reuters poll.

This slowdown was compounded by a protracted property downturn and widespread job insecurity, which have dampened fuel demand and led many Chinese refineries to cut back on production.

“Weaker economic data continues to flow from China as continued government support programs have been disappointing,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “Many of China’s refineries are cutting back on weaker fuel demand.”

Despite the bearish sentiment from China, there is a growing consensus among market participants that the U.S. Federal Reserve could begin cutting its key interest rates as soon as September.

This speculation has helped stem the decline in oil prices, as lower interest rates reduce the cost of borrowing, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell noted on Monday that the three U.S. inflation readings over the second quarter “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.

This has led market participants to believe that a turn to interest rate cuts may be imminent.

Also, U.S. crude oil inventories provided a silver lining for the oil market. According to market sources citing American Petroleum Institute figures, U.S. crude oil inventories fell by 4.4 million barrels last week.

This was a much steeper drop than the 33,000 barrels decline that was anticipated, indicating strong domestic demand.

The International Monetary Fund (IMF) also weighed in, suggesting that while the global economy is set for modest growth over the next two years, risks remain.

The IMF noted cooling activity in the U.S., a bottoming-out in Europe, and stronger consumption and exports for China as key factors in the global economic landscape.

In summary, while oil prices are currently pressured by concerns over China’s economic slowdown, the potential for U.S. interest rate cuts and stronger domestic demand for crude are providing some support.

Market watchers will continue to monitor economic indicators and inventory levels closely as they gauge the future direction of oil prices.

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