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Nigeria Sets Up N20B Oil Sector Research Fund

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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.

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Oil Holds Near Highest Since 2018 With Global Markets Tightening

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Oil held steady near the highest close since 2018, with the global energy crunch set to increase demand for crude as stockpiles fall from the U.S. to China.

Futures in London headed for a third weekly gain. Global onshore crude stocks sank by almost 21 million barrels last week, led by China, according to data analytics firm Kayrros, while U.S. inventories are near a three-year low. The surge in natural gas prices is expected to force some consumers to switch to oil, tightening the market further ahead of the northern hemisphere winter.

China on Friday sold oil to Hengli Petrochemical Co. and a unit of PetroChina Co. in the first auction of crude from its strategic reserves said traders with the knowledge of the matter. Grades sold included Oman, Upper Zakum and Forties.

Oil has rallied recently after a period of Covid-induced demand uncertainty, with some of the world’s largest traders and banks predicting prices may climb further amid the energy crisis. Global crude consumption could rise by an additional 370,000 barrels a day if natural gas costs stay high, according to the Organization of Petroleum Exporting Countries.

“Underpinning the latest bout of price strength is a tightening supply backdrop,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd.

Various underlying oil market gauges are also pointing to a strengthening market. The key spread between Brent futures for December and a year later is near $7, the strongest since 2019. That’s a sign traders are positive about the market outlook.

At the same time, the premium options traders are paying for bearish put options is the smallest since January 2020, another indication that traders are less concerned about a pullback in prices.

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Oil Gains 1 Percent on Possible Tight Supply 

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Oil prices rose on Tuesday as analysts pointed to signs of U.S. supply tightness, ending days of losses as global markets remain haunted by the potential impact on China’s economy of a crisis at heavily indebted property group China Evergrande.

Brent crude gained 95 cents or 1.3% to $74.87 a barrel by 0645 GMT, having fallen by almost 2% on Monday. The contract for West Texas Intermediate (WTI) , which expires later on Tuesday, was up 91 cents or 1.3% at $71.20 after dropping 2.3% in the previous session.

Global utilities are switching to fuel oil due to rising gas and coal prices, and lingering outages from the Gulf of Mexico after Hurricane Ada that imply less supply is available, ANZ analysts said.

“While slowing Chinese economic growth and uncertainty around the (U.S.) Fed’s tapering timetable weighed on market sentiment, other developments still point to higher oil prices,” ANZ Research said in a note.

Still, investors across financial assets have been rocked by the fallout from heavily indebted Evergrande (3333.HK) and the threat of a wider market shakeout in the longer term.

“Evergrande’s woes are threatening the outlook for the world’s second-largest economy and making some investors question China’s growth outlook and whether it is safe to invest there,” said Edward Moya, senior market analyst at OANDA.

While that view of the state of China’s economy is weighing on markets, the U.S. Federal Reserve is also expected to start tightening monetary policy – likely to make investors warier of riskier assets such as oil.

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Crude Oil Drops as U.S Dollar Extends Gain

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Oil prices declined on Monday after the United States Dollar rose to a three-week high and the U.S oil rig count increased amid drop in U.S. Gulf of Mexico output.

Brent crude oil, against which Nigerian crude oil is priced, sheds $1.03 or 1.37 percent to $74.31 per barrel at 9.38 am Nigerian time. While the U.S West Texas Intermediate oil declined by $1.18 or 1.64 per barrel to $70.79 a barrel.

The recent increase in dollar strength against global currencies has dragged on crude oil outlook as energy investors cut down on imports to avoid possible market headwinds. Strong U.S. dollar priced crude oil is more expensive for holders of other currencies.

U.S dollar rose to a three-week high after retail sales unexpected rose by 0.7 percent in the month of August. The increase bolstered expectations that the U.S Federal Reserve will start cuttiing down on asset purchases later this year.

“U.S. consumption is not slowing as quickly as it appeared a month ago despite the fading stimulus, and the Delta variant did not much affect the industries feeding into retail sales,” said Chris Low, chief economist at FHN Financial in New York. “The economy continued to hum in August.”

According to the researchers at ING Bank, strong US dollar over the last few days has provided some headwinds to the market.

Also, an increase in U.S rig count to 512 in the week ended September 17, 2021 clouded the oil market. Oil rige rose by 9, the highest since April 2020.

Still, as at Friday 23 percent of U.S. Gulf of Mexico crude output, or 422,078 barrels per day, remained shut, stated the Bureau of Safety and Environmental Enforcement.

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