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NEMBE SPILL: AITEO Mobilizes To Clean Up SBAR SPILL, Collaborates With Renowned ‘BOOTS & COOTS, CNA

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• CEO, Benny Peters Assures Affected Communities of Speed, Ecosystem Protection.

Two weeks after a non-producing wellhead in the NembeLocal Government Area of Bayelsa State leaked and is still spewing its contents, the operators of the NNPC/Aiteo Joint Venture of Oil Mining Lease (OML) 29, Aiteo Eastern Exploration and Production Co. (AEEPCo), have announced several proactive measures to combat and contain the spill.

The wellhead, located in the Santa Barbara Southwest field in Nembe LGA, was, according to AITEO, predominantly dormant. The leak started on November 5. According to Ndiana Mathew, spokesperson for AITEO, said that upon noticing the leak, “Aiteo notified all relevant regulatory agencies and, thereafter, mobilised containment resources to limit the impact on the environment. As required, Aiteo promptly called for a Joint Inspection Visit (JIV). Due to the high-pressure effusion, the JIV team could not reach the location and that inspection was aborted.”

“Since then, Aiteo has activated an elaborate and extensive spillage containment response in the internationally prescribed manner. Though spills of this nature are not uncommon to the oil and gas industry, their resolution requires expert skill and equipment that is not routinely or readily available. The typical process is to first kill the well and stop the leak and then focus on the clean-up.”

Mathew said further that aside from the urgent possible technical responses to contain the leak, Aiteo has sought, become involved with and is now in active collaboration with Clean Nigeria Associates (CNA) which has since mobilised to site in addition to Aiteo internal resources to reinforce containment and recovery efforts. CNA is the oil and gas industry non-profit umbrella body with expertise and resources to contain spills of this nature. Because it was causing growing anxiety among the local communities that rely on the surrounding land and waterways, the area has been cordoned off and the CNA is mobilising additional resources to strengthen the containment effort.

It was gathered that a well-killing assessment site visit has been carried out to evaluate the assets and earmark the resources required to bring the effusion under control. The required apparatus including heavy-duty and specialist equipment are presently being mobilized, locally and internationally, on a fast-track basis, to bring the well under control. For this purpose, “Aiteo has on-boarded the involvement of the renowned Boots & Coots, arguably the leading well control company in the world, working with a local resource. Upon this intervention and conclusion, it is expected that the persistence of the leak alongside its functional consequences will be abated and significantly diminished,” Mathew stated.

Also, senior personnel of AITEO have visited the affected communities and made available, for the use of the communities, relief materials aimed at ameliorating the direct consequences of the incident. At Opu-Nembe Kingdom where the Aiteo delegation was received by the traditional ruler, His Royal Majesty, Dr Biobelemoye Josiah Ogbodo VIII, his council of chiefs and foremost indigenes and government officials, the King said, “We are happy that Aiteo has initiated this visit to support the community at this time and urge it to continue to work with us as partners in progress on its corporate goals in the community.”

Similarly, the Aiteo Group CEO, Mr Benedict Peters, has extended his assurances to the affected communities affirming, “We are doing everything in our power to contain this spill and ameliorate the situation as rapidly, safely and responsibly as possible. We have mobilized best-in-class resources and expertise to put this mishap behind us. Be rest assured of our resolve to limit the escape of oil and protect the ecosystem from its effects.”

In the statement signed by Mathew, the company averred that it remains committed to ensuring immediately that the circumstances are brought under better control and ascertaining the immediate and remote causes of the leak.

Furthermore, “It is important that we affirm our preliminary view based on our assessment of the proximate circumstances that it will be difficult to exclude deliberate tampering of the well by oil thieves attempting to siphon crude directly from the wellhead. In our view, sabotage remains the most imminent cause of this incident,” the company stated.

“Oil theft and asset vandalism continue to present the biggest challenge we face in the operations of oil and gas production in the Niger Delta area. It has continued to damage the production profile of oil producers in so many ways.

As we commend the relevant security agencies with whom we interface to combat this menace, we believe the need and capacity to provide significantly more remain overwhelmingly critical especially because there is so much more to be done to realign the architecture of the delivery infrastructure of oil and gas production in Nigeria in line with the current industry structure of multiple producers operating assets that were previously built and managed by one producer.”

The company reiterated that it feels deeply concerned about the incident and that the circumstances and fortunes of the immediate community remain its most anxious consideration, which it stated had assumed the highest priority alongside making safe the well and its immediate environs.

“It is our fervent desire that in the attainment of this intensely challenging objective, the interests of the proximate community continue to be safeguarded in every material respect by the collective efforts of our company and all the industry professionals whose involvement Aiteo has convoked,” the statement concluded.

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Oil Prices Dip on Sluggish Demand Signs and Fed’s Interest Rate Outlook

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Oil prices on Monday dipped as the U.S. Federal Reserve officials’ comments showed a cautious approach to interest rate adjustments.

The dip in prices reflects concerns over the outlook for global economic growth and its implications for energy consumption in the world’s largest economy.

Brent crude oil, against which Nigerian oil is priced, slipped by 7 cents or 0.1% to $82.72 per barrel while U.S. West Texas Intermediate crude oil stood at $78.21 per barrel, a 5 cents decline.

Auckland-based independent analyst Tina Teng highlighted that the oil market’s focus has shifted from geopolitical tensions in the Middle East to the broader world economic outlook.

Concerns arose as China’s producer price index (PPI) contracted in April, signaling continued sluggishness in business demand.

Similarly, recent U.S. economic data suggested a slowdown, further dampening market sentiment.

The discussions among Federal Reserve officials regarding the adequacy of current interest rates to stimulate inflation back to the desired 2% level added to market jitters.

While earlier in the week, concerns over supply disruptions stemming from the Israel-Gaza conflict had provided some support to oil prices, the attention has now turned to macroeconomic indicators.

Analysts anticipate that the U.S. central bank will maintain its policy rate at the current level for an extended period, bolstering the dollar.

A stronger dollar typically makes dollar-denominated oil more expensive for investors holding other currencies, thus contributing to downward pressure on oil prices.

Furthermore, signs of weak demand added to the bearish sentiment in the oil market. ANZ analysts noted that U.S. gasoline and distillate inventories increased in the week preceding the start of the U.S. driving season, indicating subdued demand for fuel.

Refiners globally are grappling with declining profits for diesel, driven by increased supplies and lackluster economic activity.

Despite the prevailing challenges, expectations persist that the Organization of the Petroleum Exporting Countries (OPEC) and their allies, collectively known as OPEC+, may extend supply cuts into the second half of the year.

Iraq, the second-largest OPEC producer, expressed commitment to voluntary oil production cuts and emphasized cooperation with member countries to stabilize global oil markets.

However, Iraq’s suggestion that it had fulfilled its voluntary reductions and reluctance to agree to additional cuts proposed by OPEC+ members stirred speculation and uncertainty in the market.

ING analysts pointed out that Iraq’s ability to implement further cuts might be limited, given its previous shortfall in adhering to voluntary reductions.

Meanwhile, in the United States, the oil rig count declined to its lowest level since November, signaling a potential slowdown in domestic oil production.

As oil markets continue to grapple with a complex web of factors influencing supply and demand dynamics, investors and industry stakeholders remain vigilant, closely monitoring developments and adjusting their strategies accordingly in an ever-evolving landscape.

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Brent Crude Hovers Above $84 as Demand Rises in U.S. and China

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Brent crude oil continued its upward trajectory above $84 a barrel as demand in the United States and China, the two largest consumers of crude globally increased.

This surge in demand coupled with geopolitical tensions in the Middle East has bolstered oil markets, maintaining Brent crude’s resilience above $84 a barrel.

The latest data revealed a surge in demand, particularly in the U.S. where falling crude inventories coincided with higher refinery runs.

This trend indicates growing consumption patterns and a positive outlook for oil demand in the world’s largest economy.

In China, oil imports for April exceeded last year’s figures, driven by signs of improving trade activity, as exports and imports returned to growth after a previous contraction.

ANZ Research analysts highlighted the ongoing strength in demand from China, suggesting that this could keep commodity markets well supported in the near term.

The positive momentum in demand from these key economies has provided a significant boost to oil prices in recent trading sessions.

However, amidst these bullish indicators, geopolitical tensions in the Middle East have added further support to oil markets. Reports of a Ukrainian drone attack setting fire to an oil refinery in Russia’s Kaluga region have heightened concerns about supply disruptions and escalated tensions in the region.

Also, ongoing conflict in the Gaza Strip has fueled apprehensions of broader unrest, particularly given Iran’s support for Palestinian group Hamas.

Citi analysts emphasized the geopolitical risks facing the oil market, pointing to Israel’s actions in Rafah and growing tensions along its northern border. They cautioned that such risks could persist throughout the second quarter of 2024.

Despite the current bullish sentiment, analysts anticipate a moderation in oil prices as global demand growth appears to be moderating with Brent crude expected to average $86 a barrel in the second quarter and $74 in the third quarter.

The combination of robust demand from key economies like the U.S. and China, coupled with geopolitical tensions in the Middle East, continues to influence oil markets with Brent crude hovering above $84 a barrel.

As investors closely monitor developments in both demand dynamics and geopolitical events, the outlook for oil prices remains subject to ongoing market volatility and uncertainty.

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Brent Plunges Below $83 Amidst Rising US Stockpiles and Middle East Uncertainty

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The global oil declined today as Brent crude prices plummeted below $83 per barrel, its lowest level since mid-March.

This steep decline comes amidst a confluence of factors, including a worrisome surge in US oil inventories and escalating geopolitical tensions in the Middle East.

On the commodity exchanges, Brent crude, the international benchmark for oil prices, experienced a sharp decline, dipping below the psychologically crucial threshold of $83 per barrel.

West Texas Intermediate (WTI) crude oil, the US benchmark, also saw a notable decrease to $77 per barrel.

The downward spiral in oil prices has been attributed to a plethora of factors rattling the market’s stability.

One of the primary drivers behind the recent slump in oil prices is the mounting stockpiles of crude oil in the United States.

According to industry estimates, crude inventories at Cushing, Oklahoma, the delivery point for WTI futures contracts, surged by over 1 million barrels last week.

Also, reports indicate a significant buildup in nationwide holdings of gasoline and distillates, further exacerbating concerns about oversupply in the market.

Meanwhile, geopolitical tensions in the Middle East continue to add a layer of uncertainty to the oil market dynamics.

The Israeli military’s incursion into the Gazan city of Rafah has intensified concerns about the potential escalation of conflicts in the region.

Despite efforts to broker a truce between Israel and Hamas, designated as a terrorist organization by both the US and the European Union, a lasting peace agreement remains elusive, fostering an environment of instability that reverberates across global energy markets.

Analysts and investors alike are closely monitoring these developments, with many expressing apprehension about the implications for oil prices in the near term.

The recent downturn in oil prices reflects a broader trend of market pessimism, with indicators such as timespreads and processing margins signaling a weakening outlook for the commodity.

The narrowing of Brent and WTI’s prompt spreads to multi-month lows suggests that market conditions are becoming increasingly less favorable for oil producers.

Furthermore, the strengthening of the US dollar is compounding the challenges facing the oil market, as a stronger dollar renders commodities more expensive for investors using other currencies.

The dollar’s upward trajectory, coupled with oil’s breach below its 100-day moving average, has intensified selling pressure on crude futures, exacerbating the latest bout of price weakness.

In the face of these headwinds, some market observers remain cautiously optimistic, citing ongoing supply-side risks as a potential source of support for oil prices.

Factors such as the upcoming June meeting of the Organization of the Petroleum Exporting Countries (OPEC+) and the prospect of renewed curbs on Iranian and Venezuelan oil production could potentially mitigate downward pressure on prices in the coming months.

However, uncertainties surrounding the trajectory of global oil demand, geopolitical developments, and the efficacy of OPEC+ supply policies continue to cast a shadow of uncertainty over the oil market outlook.

As traders await official data on crude inventories and monitor geopolitical developments in the Middle East, the coming days are likely to be marked by heightened volatility and uncertainty in the oil markets.

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