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NMPRA Set to Draft Six Regulations Governing Operations

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The Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMPRA) has issued six regulations to govern its Midstream and Downstream operations.

This comes on the heels of a sum of N58bn from N500bn bridging claim the Federal Government paid to the Independent Petroleum Marketers of Nigeria (IPMAN)  through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Investors King gathered that an official statement released by the Corporate Communications of NMDPRA noted that the joint agency stated that the amount disbursed to the association is the highest they had paid within six months span by former fund administrators.

Engineer Farouk Ahmed, the Authority’s Chief Executive explained that the aim was to improve business processes, bring clarity, and ease of doing business in the sector. NMDPRA said that it was aware of the matters raised by the petroleum marketers and the difficulties being faced by the association members due to the unpaid N500bn bridging claims.

He explained that a team led by Mr Ogbugo K. Ukoha, Executive Director, Distribution Systems, Storage and Retailing Infrastructure (DSSRI) has been set up to review the draft regulations, and engage and consult stakeholders for smooth implementation when released.

The six regulations include Environmental Management Plan, Gas Pricing, Environmental Remediation Fund, Decommissioning and Abandonment, Gas Infrastructure Fund, and Gas Pipeline Tariff.

“One of our key concerns is boosting local refining. Dangote and BUA refineries are coming on board, however, we want to see more companies investing in refineries so we can stop the importation of refined petroleum products, save our foreign earnings, create jobs and add value to the economy”, Ahmed said.

Ahmed further noted the gradual growth of indigenous players in the local exploration and production of petroleum products.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (Otherwise known as “The Authority”) was created in August 2021 in line with the Petroleum Industry Act 2021 which provides a legal, governance, regulatory and fiscal framework for the Nigerian Petroleum Industry as well as the development of Host Communities.

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Crude Oil

JPMorgan Says Crude Oil Could Hit $380 a Barrel on Russia Sanctions

JPMorgan, an American multinational investment bank and financial services, had said crude oil prices could hit $380 a barrel if the United States and European sanctions force Russia to retaliate by cutting crude oil output.

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JPMorgan, an American multinational investment bank and financial services, had said crude oil prices could hit $380 a barrel if the United States and European sanctions force Russia to retaliate by cutting crude oil output.

According to JPMorgan analysts, the plans of western nations to cap the price of Russian oil in a move to tighten the screws on Vladimir Putin for invading Ukraine may backfire given Moscow’s robust fiscal space. Meaning, Russia could drop its oil production by 5 million barrels without really damaging its economy and allow sanctions imposed by western nations to push crude oil to $380.

This, they said could lead to a disastrous outcome as a 3 million barrel cut on daily supplies is estimated to push London crude prices to $190 a barrel while the worst-case scenario of 5 million could force the world to start buying a barrel at $380.

“The most obvious and likely risk with a price cap is that Russia might choose not to participate and instead retaliate by reducing exports,” the analysts wrote. “It is likely that the government could retaliate by cutting output as a way to inflict pain on the West. The tightness of the global oil market is on Russia’s side.”

Meanwhile, on Monday Brent crude oil rose 55 cents, or 0.5%, to $113.2 a barrel at 2:09 pm Nigerian time after falling over $1 in early trade.

U.S. West Texas Intermediate (WTI) crude oil appreciated by 44 cents, or 0.4%, to $107.94 a barrel, after also falling $1 earlier.

“Oil fundamentals remain supportive. Strong time spreads point to a tight market and clearly OPEC is still struggling to hit its agreed output levels,” said Warren Patterson, head of commodity research at ING.

“The group appears to be battling to maintain current output levels, with production falling over June.”

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Oil Prices Sustain Bullish Run for Fourth Consecutive Session

Global oil prices appreciated for a fourth consecutive session after it became clear OPEC and allies can not meet their production targets any time soon.

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Global oil prices appreciated for a fourth consecutive session after it became clear OPEC and allies can not meet their production targets any time soon.

Brent crude oil, against which Nigerian oil is priced, appreciated to $120 a barrel as of 3:20 pm Nigerian time on Wednesday. Representing an increase of $12 from $108 a barrel traded a week ago.

The U.S. West Texas Intermediate (WTI) rose to $112.37 per barrel, up from $99.33 per barrel a week ago.

The increase in prices was a result of sanctions imposed on about 1/5 of global supply by western nations. Russia, one of the world’s largest crude oil producers, was sanctioned for waging war against Ukraine, and eventually, disrupting the global economy.

“Given that almost 1/5 of global oil producing capacity today is under some form of sanctions (Iran, Venezuela, Russia), we believed there is no practical way to keep these barrels out of a market that was already exceptionally tight,” JP Morgan said in a research note.

This concern over global supply outweighed worries about a weaker global economy ahead of the projected economic recession in developed nations, especially with developed economies raising interest rates to curb escalating inflation numbers.

“Investors made position adjustments, but remained bullish on expectations that Saudi Arabia and the United Arab Emirates would not be able to raise output significantly to meet recovering demand, driven by a pick-up in jet fuels,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

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Oil Price Rally as Major Producers Flag Capacity Limits

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Oil prices rallied for a third day on Tuesday as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly, while political unrest in Libya and Ecuador added to supply concerns.

U.S. West Texas Intermediate (WTI) crude futures rose $1.8, or 1.6%, to $111.36 a barrel by 0644 GMT, extending a 1.8% gain in the previous session.

Brent crude futures climbed $1.9, or 1.7%, to $116.99, adding to a 1.7% rise in the previous session.

The UAE and Saudi Arabia have been seen as the only two countries in the Organization of the Petroleum Exporting Countries (OPEC) with spare capacity available to make up for lost Russian supply and weak output from other member nations.

“A seam of tight supply news bolstered the market. Two major producers, Saudi Arabia and the UAE, are said to be at, or very close to, near‑term capacity limits,” Commonwealth Bank commodities analyst Tobin Gorey said in a note.

UAE Energy Minister Suhail al-Mazrouei said on Monday UAE was producing near maximum capacity based on its quota of 3.168 million barrels per day (bpd) under the agreement with OPEC and its allies, together called OPEC+.

His comments confirmed remarks by French President Emmanuel Macron who told U.S. President Joe Biden on the sidelines of the Group of Seven nations meeting that the UAE was producing at maximum capacity and that Saudi Arabia could increase output by only 150,000 bpd, well below its nameplate spare capacity of around 2 million bpd.

Analysts also warned political unrest in Ecuador and Libya could tighten supply further.

Libya’s National Oil Corp said on Monday it might have to declare force majeure in the Gulf of Sirte area within the next three days unless production and shipping resume at oil terminals there.

Ecuador’s Energy Ministry said the country could suspend oil output completely within the next two days amid anti-government protests. The former OPEC country was pumping around 520,000 barrels per day before the protests.

Those factors underscore shortages in the market, which have led to a rebound this week, countering recession jitters that weighed on prices over the previous two weeks.

But analysts from Haitong Futures said market sentiment remains fragile with people waiting for clearer guidance for the next move and geopolitical factors in focus.

Leaders of the G7 are discussing a potential price cap on Russian oil that would hit President Vladimir Putin’s war chest while also lowering energy prices.

A French presidential official also called on global powers to explore all options to alleviate a Russian squeeze on energy supplies that has spiked prices, including talks with producing nations like Iran and Venezuela.

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