Nigeria is not relenting in increasing its oil output and reserves.
Since the Nigerian National Petroleum Company Limited (NNPCL) announced the discovery of oil in Nasarawa State, the country has been looking up to its exploration with a view to expanding its oil coast.
Aside the Nasarawa first foot of an oil well in the Northern region, NNPC has been hoping for more discovery of crude oil in more locations across the north.
Nigeria’s oil firm later said it discovered the commodity in Bauchi and Gombe States while expressing commitment in continuing its oil exploration activities in other parts of the country.
According to a document on the frontier exploration services activities of the NNPC from 2020 to 2022, oil was expected to be discovered in Niger, Sokoto, Borno, Yobe and Adamawa.
The company has said it would start the drilling of crude oil in Nasarawa on March 21, 2023.
According to the Group Chief Executive Officer of NNPCL, Mele Kyari, while speaking during a courtesy visit on the State Governor, Abdullahi Sule, the exploration for crude oil in Nasarawa State actually commenced in late 2010.
The NNPCL boss described exploration work as tedious, explaining that activities involve in it involve gathering of data, interpretation of the data, making sense of them and ultimately deciding to test the outcomes.
He said the company established a petroleum environment technically, seen its data and put in many years of work which had been done on recent times.
While commending Governor Sule for supporting activities of the company, Kyari said the discovery of the Nasarawa oil is during the administration of the incumbent governor and that the support of President Muhammadu Buhari has also gone a long way in ensuring the success so far.
The NNPCL boss said great potential has been discovered since the discovery of hydrocarbon in Nasarawa State, and expressed optimism that the exploration would be successful.
He said when the drilling is done and oil found in Nasarawa, it would usher tremendous development in the state and the country at large.
Specifically, he said the drilling of the first oil well would be done in Obi/Keana Nasarawa State in March, pointing out that the exploration would not be limited to the current location in Obi/Keana.
Investors King had reported that in November last year, President Muhammadu Buhari had flagged off the first crude oil drilling project in northern Nigeria, on the boundary of Bauchi and Gombe States.
The NNPC had in October 2019 announced the discovery of hydrocarbon deposits in the Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-eastern part of the country.
The commercial quantity discovery was the first in the region after several crude oil explorations in the Upper Benue Trough.
The discovery of oil and gas in commercial quantities in the Gongola Basin, according to NNPC, will attract foreign investment, generate employment for people to earn income and increase government revenues.
Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns
Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.
Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.
The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.
This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.
While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.
Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.
Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.
Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.
Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.
Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.
Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.
The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.
However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.
Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.
He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.
Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.
The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.
Oil Prices Surge as Brent Approaches $83, WTI Nears $78 Amidst Refinery Buying Activity
Oil prices surged as Brent crude oil approached the $83 price level while West Texas Intermediate (WTI) neared $78 as refineries in the United States and China increased purchases.
Brent crude oil, against which Nigerian oil is priced, gained 1.1% on Monday, signaling a bullish trend in the oil market.
The recent uptick in oil prices comes amidst signs of heightened demand from refineries, particularly in key markets like the US and China.
This surge in demand has contributed to the strengthening of timespreads, indicating tighter conditions in the near term.
Market observers are closely monitoring the International Energy Week in London, where industry leaders are convening to discuss the outlook for the global energy market.
Scheduled speakers include Russell Hardy, the CEO of Vitol Group, a major player in the energy sector.
While tensions in the Middle East and production cuts by the OPEC+ alliance have supported crude prices, increased production from non-OPEC+ countries, notably the US, has capped potential gains.
Analysts predict that oil prices may continue to trade within a range, with Brent crude expected to hover around $83, while WTI remains near the $78 mark, barring significant shifts in market dynamics.
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