Crude Oil

Nigeria’s Dormant Oil Fields Hold Key to Energy Output Surge

Published

2 months ago

June 29, 2024

Nigeria is set to reactivate eight major idle oil fields with the potential to increase the nation’s crude oil production by 900,000 barrels per day (bpd).

This initiative, if successful, could provide a much-needed boost to the economy of Africa’s largest oil producer, which has been grappling with declining investments and production inefficiencies.

Despite sitting atop 36 billion barrels of crude oil reserves and 206 trillion cubic feet of proven gas reserves, Nigeria’s oil sector has struggled in recent years.

Many lucrative oil and gas projects have lain dormant, jeopardizing the country’s long-standing goal of increasing reserves to 40 billion barrels.

Reactivating Major Projects

The fields slated for reactivation include high-capacity projects such as Zabazaba (150,000 bpd), Shell’s Bonga South West (225,000 bpd), Bonga North (100,000 bpd), Chevron’s Nsiko (100,000 bpd), ExxonMobil’s Bosi (140,000 bpd), Satellite Field development phase (80,000 bpd), and Ude (110,000 bpd).

These fields, once operational, could significantly bolster Nigeria’s oil production, which is crucial for the national budget.

Economic Potential

Oil experts believe that optimizing these idle assets is essential for Nigeria’s path to economic prosperity.

“Efficient management and investment in these projects could transform Nigeria’s energy landscape,” said Austin Avuru, Executive Chairman and Founder of AA Holdings Limited. “We need an annual investment of $25 billion over the next decade to stabilize production at 2 million barrels per day.”

This ambitious plan, however, hinges on disciplined planning, comprehensive economic reforms, and consistent government policies that can attract and sustain investor confidence.

The recently passed Petroleum Industry Act (PIA) was expected to be a game-changer, but its implementation has been marred by bureaucratic obstacles and corruption.

Overcoming Challenges

“The projected benefits of the PIA have not materialized due to poor implementation,” noted a senior industry source. “Regulatory bottlenecks and demands for bribes continue to impede progress.”

The Nigerian National Petroleum Company (NNPC) Ltd has faced criticism for its role in the sector’s underperformance.

Critics argue that the state-owned company has not focused enough on improving technical efficiency, which is crucial for maximizing output from existing assets.

A New Hope

President Bola Tinubu’s administration has shown a renewed commitment to addressing these issues.

Last year, the government secured a $3.2 billion loan from the African Export-Import Bank (Afrexim) to support economic reforms.

This, coupled with Tinubu’s assurance to resolve investment-related issues, has raised hopes for a turnaround.

“We are determined to make Nigeria a haven for large-scale investment in key sectors,” Tinubu assured a delegation from Shell last December.

Industry Optimism

Oil industry stakeholders are cautiously optimistic. “The resolution of legal disputes surrounding assets like OPL 245 is a positive step,” said Ayodele Oni, energy lawyer and partner at Bloomfield Law Firm. “It signals to investors that Nigeria is serious about creating a stable and attractive investment climate.”

As Nigeria prepares to bring these dormant fields back online, the world will be watching closely. Successful reactivation could not only stabilize Nigeria’s oil production but also set the stage for sustained economic growth and development.

For now, the potential surge in energy output from these fields represents a beacon of hope for the country’s struggling oil sector.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

Published

3 days ago

September 5, 2024

Samed Olukoya

Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

Crude Oil

Again NNPC Raises Petrol Price to N897/litre

Published

4 days ago

September 4, 2024

Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.

Crude Oil

Brent and WTI Steady After Recent Losses as Libyan Oil Halt Continues

Published

6 days ago

September 2, 2024

Samed Olukoya

Oil prices stabilised on Monday as Libyan oil exports remained halted and following losses at the end of last week on expectations of higher OPEC+ production from October and signs of sluggish Chinese and U.S. demand.

Brent crude oil, against which Nigerian oil is priced, dipped by 6 cents, or 0.08% to close at $76.87 a barrel , while U.S. West Texas Intermediate crude edged up 8 cents, or 0.11% to $73.63.

Monday marked a public holiday in the U.S. market.

On Friday Brent and WTI lost 1.4% and 3.1%, respectively.

Oil exports at major Libyan ports were halted on Monday and production curtailed across the country, six engineers told Reuters, continuing a standoff between rival political factions over control of the central bank and oil revenue.

Libya’s Arabian Gulf Oil Company resumed output of around 120,000 barrels per day (bpd) on Sunday, to feed a power plant at the port of Hariga.

“The current disturbances in Libya’s oil production could provide room for added supply from OPEC+. But these fluctuations have become quite normal over the last few years, meaning any outages will probably be shortlived; with the news flow indicating signals for a restart of production have already been given,” said Bjarne Schieldrop, chief commodity analyst at SEB.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, is set to proceed with planned increases to oil output from October, six sources from the producer group told Reuters.

Eight OPEC+ members are scheduled to boost output by 180,000 barrels per day (bpd) in October as part of a plan to begin unwinding their most recent supply cuts of 2.2 million bpd while keeping other cuts in place until the end of 2025.

Both Brent and WTI have posted losses for two consecutive months as U.S. and Chinese demand concerns have outweighed recent disruptions in Libya and supply risk related to conflict in the Middle East.

More pessimism about Chinese demand growth surfaced after an official survey showed on Saturday that manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders.

“The softer-than-expected China PMI released over the weekend heightens concerns that the Chinese economy will miss growth targets,” IG market analyst Tony Sycamore said.

In the U.S., oil consumption in June dropped to seasonal lows last registered during the COVID-19 pandemic in 2020, Energy Information Administration data showed on Friday.