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Nigeria’s Oil Rig Count Reaches Highest Level Since 2020

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Nigeria’s oil rig count has increased to 13, its highest level since January 2020, according to a new report from the Organization of the Petroleum Exporting Countries (OPEC).

The rise in the country’s oil rig count by 85.7 percent from seven in September to 13 last month is due to an increase in investment in upstream exploration and demand for crude globally, Investors King reports.

Experts attribute the increase in oil rigs to the passing of the Petroleum Industry Act (PIA) in 2021, which introduced fiscal changes and incentives for the industry. The favorable fiscal regime under the PIA will allow upstream operators to enjoy higher fiscal rewards based on higher production volumes, which will attract more investment in oil exploration.

The rise in oil rig count will have a positive effect on Nigeria’s economy, with the contribution of the oil sector to the country’s Gross Domestic Product (GDP) expected to grow. More exploration activities are expected to occur, and Nigerians can expect an even bigger boost in investment in the oil and gas sector.

The offshore drilling company, Dolphin Drilling, secured a $96 million contract to provide a drilling rig for an oil asset in offshore operations in Nigeria, which will expand offshore assets in the country. The increase in oil rig count also means that more in-fill wells were drilled from existing oil fields during that period.

Nigeria’s offshore industry will maintain the momentum of drilling activity it saw in 2022, with five offshore rigs scheduled to be active in the country this year. The increase in drilling activity offshore Nigeria since 2022 is expected to continue well into 2023, according to industry experts.

The increase in the oil rig count in January is linked to the increase in oil production during that period. Nigeria’s oil production increased by 23,000 barrels per day (bpd) to 1.258 million bpd in January, the highest since January 2022.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Remain Steady Ahead of U.S. Inflation Data

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Oil prices were holding steady on Friday as investors awaited the release of key U.S. inflation data that could provide clues on future interest rate moves.

Brent crude oil, the international benchmark for Nigerian oil, which has risen by almost 6% this week was up by 0.2% at $79.45 a barrel, while West Texas Intermediate crude oil rose by 0.7% to $74.89.

Concerns about a full-blown global banking crisis have abated after banks in the U.S. and Europe were rescued, and oil prices have broadly recouped losses that followed the largest bank failures since the 2008 financial crisis.

Oil prices have also been supported by the shutdown or reduction of output at several oilfields in the semi-autonomous Kurdistan region of northern Iraq following a halt to the northern export pipeline.

Data has shown that U.S. crude oil stockpiles have fallen to a two-year low while China’s manufacturing activity rose in March.

Investors are now waiting for the U.S. personal consumption expenditures (PCE) figures due later today to decipher market direction. Economists polled by Reuters expect the core PCE index to ease to 0.4% in February from January and stay broadly steady on an annual basis at 4.7%.

On Thursday, the U.S. House of Representatives passed a bill intended to boost U.S. oil and gas production while scaling back climate initiatives.

Sources have suggested that with oil prices recovering from recent lows, the Organization of the Petroleum Exporting Countries and allies led by Russia are likely to stick to their existing deal to cut oil output at a meeting on Monday.

Investors will be closely monitoring the outcome of this meeting and any further developments that may impact oil prices.

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Oil Prices Rise on Unexpected U.S. Crude Stockpile Drop and Halt in Iraqi Exports

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Oil prices increased on Thursday due to a surprise decline in U.S. crude stockpiles and a stoppage in exports from the Kurdistan region of Iraq that outweighed a smaller-than-expected cut in Russian supplies.

Brent crude oil, against which Nigerian oil is priced, climbed 0.51% to $78.68 a barrel while West Texas Intermediate crude oil rose 0.71% to $73.49 a barrel.

The Energy Information Administration revealed on Wednesday that U.S. crude oil stockpiles had dropped unexpectedly in the week ended March 24 to a two-year low.

Analysts had predicted a 100,000-barrel increase, but the inventory dropped by 7.5 million barrels.

Also, exports from Iraq’s northern region remained suspended due to oilfield producers shutting down or decreasing production following a stoppage to the northern export pipeline.

The Kurdistan-Iraq premium in oil prices, however, may vanish sooner than anticipated, as analysts from Citi predicted that pipeline flows could grow by around 200,000 barrels per day due to changes in Iraq’s domestic politics, which could lead to a durable political settlement.

Although the lower-than-expected cut to Russian crude oil production caused bearish sentiment, it was offset by the unexpected U.S. crude stockpile drop and halt in Iraqi exports.

The 300,000 barrels per day production decline in the first three weeks of March represented around 5% of Russian output, compared to targeted cuts of 500,000 barrels per day.

UBS stated that they anticipate rising Chinese crude imports and lower Russian production to boost prices over the coming quarters, despite the potential for near-term volatility in oil prices.

Meanwhile, markets will keep an eye on U.S. spending and inflation data scheduled for Friday and their impact on the value of the U.S. dollar.

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NNPCL Intensifies Oil Exploration, Targets 50 Billion Barrels Reserves

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The Nigerian National Petroleum Company Limited, NNPCL has intensified efforts to boost the nation’s crude oil reserves to 50 billion barrels.

Investors King gathered that the NNPCL has drawn out plans to move from the 37 billion barrels of oil reserves to 50 billion barrels through its recent projects.

This is as the national oil company launched officially the spud-in (drilling) for crude oil in the Ebenyi-A Well in Obi Local Government Area of Nasarawa State.

Speaking at the event on Tuesday, the Group Chief Executive Officer, NNPCL, Mele Kyari stated that the new drilling rig at the Ebenyi-A Well site will increase Nigeria’s oil output to about three million barrels per day.

In November 2022, the national oil company inaugurated the Kolmani oil well located between Bauchi and Gombe states to also improve the nation’s oil reserves, Investors King recalls.

Kyari noted that the Ebenyi-A Well will greatly aid the NNPCL in attaining its 50 million barrels oil reserves target.

He spoke on the collaboration between NNPC Limited and Nigeria Upstream Petroleum Regulatory Commission (NURPC) for better oil exploration activities through the use of technology for the nation’s frontier basins which cuts across the Chad Basin, Upper and Lower Benue troughs, Bida Basin, the Sokoto Basin, Dahomey, Anambra platform, Calabar embankment and the Ultra deep water Niger Delta.

Kyari disclosed that the directive of President Muhammadu Buhari on the mobilisation for re-entry into the Chad Basin had been enacted and the entry had begun. 

Buhari, who addressed the attendees virtually said the Ebenyi-A Well of the Middle Benue Trough will further aid the exploration of crude and gas in the frontier basins across Nigeria.

He commended the efforts of the NNPCL and support of the government and people of Nasarawa State towards the success of the oil exploration

His words, “Today’s occasion marks the official commencement of exploration drilling activities in the Middle Benue Trough. This is consistent with the commercial discoveries of hydrocarbons in the Kolmani Area of the Upper Benue Trough.

“I am pleased to note that activities are currently ongoing to develop the Kolmani petroleum discoveries to commercial production to add to the nation’s considerable hydrocarbon assets.

“The consequent positive outcomes of these drilling campaigns will lead to greater prosperity for our people and especially enhance overall energy security for our country.”

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