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Nigeria to Add 500,000 bpd to Crude Oil Production – NNPC

Nigeria is expected to add 500,000 barrels per day to its crude oil output once Shell Plc-operated Forcados oil terminal and the Trans Niger Pipeline resume operations

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Nigeria, Africa’s largest crude oil producer, is expected to add 500,000 barrels per day to its crude oil output once Shell Plc-operated Forcados oil terminal and the Trans Niger Pipeline resume operations, the Chief Executive Officer of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari told Bloomberg.

The Forcados oil terminal which produces about 258,000 barrels of crude oil daily was shut down in July after a leak was discovered by Shell Plc and repair works have since been ongoing on the terminal while the Trans Niger Pipeline which produces about 180,000 barrels of crude oil daily ceased operations due to crude oil theft and vandalism six months ago.

The two crude oil lines that produces a combined 438,000 barrels per day are expected to resume operations soon, according to the Federal Government. However, their combined production capacity is below the 500,000 stated by Kyari in his interview.

In recent times, Nigeria has witnessed a consistent decline in crude production and this is a result of oil theft and ongoing repair works on major oil pipelines in the country.

The underproduction of crude has forced the NNPC to delay payments to some local gasoline suppliers for three months.

According to kyari, he is confident about a positive turnaround in Nigeria’s crude production when activities begin on the Forcados oil terminals and the Trans Niger Pipeline which would allow the company clear the deferred payments.

He said, “mainly by restarting activities on the Shell Plc operated Forcados oil terminal and Trans-Niger pipeline, we will meet all the deliveries and still have surplus crude production for cash.”

Let it be recalled that Investors King had previously reported on Nigeria losing one million barrels of crude daily, which has resulted in the country losing her crown as the biggest crude producer in Africa to Angola.

Last week, NNPC discovered 395 illegal refineries in the Niger Delta region.

NNPC CEO said that criminal enterprise of such magnitude has been crippling the oil revenue of the country.

Meanwhile, days after the discovery of the illegal refineries, Tompolo, revealed that Nigerians operate as many as 58 illegal crude oil tapping sites in Bayelsa and Delta States in the Niger Delta region.

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Crude Oil

Nigeria’s Oil Rig Count Soars From 11 to 30, Says NUPRC CEO

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The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has announced a surge in the country’s oil rig count.

Komolafe disclosed that Nigeria’s oil rigs have escalated from 11 to 30, a substantial increase since 2011.

Attributing this surge to concerted efforts by NUPRC and other governmental stakeholders, Komolafe highlighted the importance of instilling confidence, certainty, and predictability in the oil and gas industry.

He explained the pivotal role of the recently implemented Petroleum Industry Act (PIA), which has spurred significant capital expenditure amounting to billions of dollars over the past two and a half years.

Speaking in Lagos after receiving The Sun Award, Komolafe underscored the effective discharge of NUPRC’s statutory mandate, which has contributed to the success stories witnessed in the sector.

The surge in Nigeria’s oil rig count signifies a tangible measure of vibrant activities within the upstream oil and gas sector, reflecting increased drilling activity and heightened industry dynamism.

Also, Komolafe noted that NUPRC has issued over 17 regulations aimed at enhancing certainty and predictability in industry operations, aligning with the objectives outlined in the PIA.

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Oil Prices Rebound in Asian Markets Amid Red Sea Shipping Concerns

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Amid escalating attacks on shipping in the Red Sea and growing uncertainty regarding U.S. interest rate cuts, oil prices rebounded in Asian markets today.

Brent crude oil, against which Nigerian oil is priced, climbed by 24 cents to $82.58 a barrel while the U.S. West Texas Intermediate crude oil (WTI) rose by 21 cents to $77.25.

The rebound comes after both Brent and WTI contracts experienced a 1.5% and 1.4% decline, respectively, from their near three-week highs on Tuesday.

This decline occurred as the premium for prompt U.S. crude futures to the second-month contract widened to $1.71 a barrel, its widest level in approximately four months.

However, on Wednesday, the premiums slid to 4 cents a barrel.

Analysts suggest that oil futures have entered a relatively range-bound phase, with current prices reflecting a risk premium of $6-7 per barrel.

The situation could persist until the next significant development in the Gaza crisis, whether it involves a de-escalation through a ceasefire or a further intensification of the conflict.

Recent attacks on vessels in the Red Sea and Bab al-Mandab strait by Yemen’s Iran-aligned Houthis have heightened concerns over freight flows through these critical waterways.

Moreover, Washington’s veto of a draft UN Security Council resolution on the Israel-Hamas war has added to geopolitical tensions impacting oil markets.

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Middle East Tensions Keep Oil Prices Near Three-Week Highs, China’s Economic Recovery Offers Support

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Oil prices remained close to three-week highs on Tuesday, buoyed by ongoing tensions in the Middle East and signs of economic recovery in China.

Brent crude oil, against which Nigerian oil is priced, dipped by 29 cents to settle at $83.27 a barrel while U.S. West Texas Intermediate (WTI) crude oil fell 38 cents to $78.08 a barrel.

Geopolitical uncertainties in the Middle East, particularly heightened by Iran-aligned Houthi attacks on shipping lanes, continued to influence market sentiment.

The Houthis’ recent strikes have targeted vessels in the Red Sea and Bab al-Mandab Strait, escalating concerns about disruptions to global shipping.

Meanwhile, China’s economic resilience served as a counterbalance to the geopolitical tensions. The country’s tourism revenue surged by 47.3% year-on-year, surpassing pre-COVID levels during the Lunar New Year holiday.

Also, China implemented a record cut to a benchmark mortgage reference rate to stabilize its property market and economy.

Despite these supportive factors, concerns about global oil demand lingered following a bearish report by the International Energy Agency (IEA).

The IEA revised its 2024 oil demand growth forecast downward, reflecting the ongoing transition to cleaner energy sources worldwide.

As such, market participants remain vigilant about the delicate balance between geopolitical risks and demand dynamics influencing oil prices.

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