Exxon Mobil Corp has announced plans to boost its oil production in Nigeria by an additional 40,000 barrels per day.
This renewed commitment to Nigeria’s energy sector was disclosed by Exxon’s President of Global Upstream Operations during discussions with Nigerian President Bola Tinubu in New York, on the sidelines of this week’s U.N. General Assembly.
The aim of this meeting was to attract global investments to Africa’s largest economy as stated by presidential spokesperson Ajuri Ngelale in a recent statement.
Nigeria’s state oil firm, NNPC Ltd., has been engaged in joint ventures and offshore production-sharing contracts with major oil companies, including Exxon, responsible for more than 80% of the nation’s oil production.
Exxon expressed its satisfaction with the progress it has made in Nigeria, with Liam Mallon, an executive at the company, saying, “We are growing our production, and we are working diligently to expand our deepwater production.”
While an Exxon spokesperson confirmed the discussions with the Nigerian president, they declined to provide specific details about the talks.
Nigeria has recently witnessed a notable increase in its oil and condensates production, surging from just under a million barrels per day to 1.67 million barrels per day. This upturn is attributed to enhanced security measures in the oil-rich Niger River delta region.
However, despite the passage of a historic oil bill two years ago aimed at reducing regulatory uncertainties and attracting investments, Africa’s largest oil producer continues to face challenges such as widespread theft and sabotage within its oil industry.
According to the official statement, President Tinubu has vowed to address these lingering issues and eliminate any hindrances that impede the inflow of new and substantial capital into Nigeria’s energy sector.
He said, “The complex issues necessitate direct oversight on my part. Despite numerous competing responsibilities, I am committed to personally overseeing the process of resolving these obstacles.”
He concluded by stating, “Nigeria has never been better prepared for business than it is today.”
Libyan Oil Field and Gas Link to Italy Reopen After Protesters Withdraw
Following a brief interruption, operations at an oil field in western Libya and a natural gas link to Italy have resumed as protesters retreated from the facilities.
The demonstrators withdrew after receiving assurances from the government regarding their demands.
The Wafa oil field, which typically produces between 40,000 to 45,000 barrels per day, recommenced shipments after a temporary halt prompted by guards’ demands for improved compensation.
Similarly, the gas pipeline connection to Italy is once again operational, according to sources familiar with the situation who preferred anonymity due to the sensitivity of the matter.
Protests disrupting energy infrastructure and output are not uncommon in Libya.
In recent times, demonstrations have frequently disrupted operations, with the significant Sharara oil field experiencing prolonged suspension last month due to similar protests, invoking a force majeure clause in contracts.
The resumption of activities marks a relief for both the Libyan energy sector and Italy, which heavily relies on the natural gas link for its energy needs.
However, the incidents underscore the ongoing challenges faced by Libya in maintaining stability within its vital energy infrastructure amidst socio-political unrest.
Efforts to address the grievances of protesters and ensure sustained operations remain pivotal for the country’s economic well-being and regional energy dynamics.
Oil Prices Dip on Monday as Dollar Gains
Oil prices experienced a downturn, extending losses from the previous session as the U.S. dollar surged against global counterparts to impact market sentiment.
Brent crude oil, against which Nigerian oil is priced, slipped by 0.2% to $81.48 a barrel while U.S. West Texas Intermediate crude (WTI) declined by 0.3% to $76.27 a barrel.
The upward trajectory of the dollar renders oil more costly for holders of other currencies, contributing to the decline in oil prices.
This downward trend follows a week of losses, with Brent declining approximately 2% and WTI falling over 3%.
Market participants attribute these fluctuations to concerns about inflation potentially delaying anticipated cuts to high U.S. interest rates. Such expectations have been suppressing global fuel demand growth.
Analysts observe a retreat in the risk-on sentiment, coinciding with heightened expectations of prolonged interest rates.
Tina Teng, an independent analyst based in Auckland, notes that the recent market rally led by Nvidia has stalled, as elevated rate expectations bolster the U.S. dollar, thereby pressuring commodity prices, including oil.
Despite geopolitical tensions such as the Israel-Hamas conflict and attacks on ships in the Red Sea, which could have traditionally boosted oil prices, the impact remains modest.
Moreover, investors are monitoring developments surrounding Russian oil supply following recent U.S. sanctions on Moscow’s leading tanker group.
Amidst these uncertainties, Qatar’s decision to increase liquefied natural gas production further adds to global energy supplies.
Crude Oil Dips Slightly on Friday Amid Demand Concerns
On Friday, global crude oil prices experienced a slight dip, primarily attributed to mounting concerns surrounding demand despite signs of a tightening market.
Brent crude prices edged lower, nearing $83 per barrel, following a recent uptick of 1.6% over two consecutive sessions.
Similarly, West Texas Intermediate (WTI) crude hovered around $78 per barrel. Despite the dip, market indicators suggest a relatively robust market, with US crude inventories expanding less than anticipated in the previous week.
The oil market finds itself amidst a complex dynamic, balancing optimistic signals such as reduced OPEC+ output and heightened tensions in the Middle East against persistent worries about Chinese demand, particularly as the nation grapples with economic challenges.
This delicate equilibrium has led oil futures to mirror the oscillations of broader stock markets, underscoring the interconnectedness of global economic factors.
Analysts, including Michael Tran from RBC Capital Markets LLC, highlight the recurring theme of robust oil demand juxtaposed with concerning Chinese macroeconomic data, contributing to market volatility.
Also, recent attacks on commercial shipping in the Red Sea by Houthi militants have added a risk premium to oil futures, reflecting geopolitical uncertainties beyond immediate demand-supply dynamics.
While US crude inventories saw a slight rise, they remain below seasonal averages, indicating some resilience in the market despite prevailing uncertainties.
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