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FG, Oil Firms Optimistic About Increased Crude Production

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  • FG, Oil Firms Optimistic About Increased Crude Production

The Federal Government and oil firms have expressed optimism that crude production in the country will increase this year as efforts to stem militancy in the Niger Delta and introduce a new funding structure for joint venture assets gain traction.

Nigeria, which had been exempted from the deal by the Organisation of Petroleum Exporting Countries to cut output from January, hoped to pull its economy out of recession on the back of the upswing in global crude prices and restore oil production to at least 2.2 million barrels per day, President Muhammadu Buhari said in early December.

Negotiations with militants in the Niger Delta to end attacks on oil facilities are also progressing and a new funding scheme for upstream ventures with foreign partners was recently agreed.

For now, the country continues to suffer from the oil price downturn as oil accounts for about 90 per cent of its foreign exchange earnings and about 80 per cent of the government’s total revenue.

“The government is sure that the target to raise oil production to 2.2 million bpd or even more next year is realisable,” Femi Adesina, presidential spokesman told S&P Global Platts.

“The peace deal with militants to ensure zero disruption is in progress, though slow, but I can assure you that with a show of faith, the peace deal will be consummated in no time,” Adesina said.

Oil companies believe the return of peace in the restive Niger Delta region is key to the execution of the projects needed to increase production.

Just as the government needs higher oil production for more revenue, companies need the peace and security in the Niger Delta to be able to move in and repair damaged assets, especially in onshore and shallow waters, and even plan new projects.

“Once this is achieved, production can even reach 2.3 million bpd,” said one official at a Western oil company.

Nigerian oil output, which had recovered sharply in October from a 30-year low of around 1.4 million bpd in May, suffered a setback after another attack on the Trans-Forcados pipeline on November 2 impacted the transportation of the crude and shut-in the popular Forcados grade.

“With oil prices boosted by the OPEC and non-OPEC production cut, we companies are encouraged to invest next year but only if the Nigerian government can achieve a win-win situation with the militants in the Niger Delta,” the Managing Director, Britannia-U, Uju Ifejika, said.

A recovery in Nigeria’s oil production is premised not only on solving the Delta militancy, but also on the country’s successful negotiations of years of debts owed to its partners on counterpart funding for oil ventures, and introduction of new funding mechanism to drive investment in the upstream sector.

Nigeria negotiated $1.7bn off the $6.8bn in unpaid bills over the last four years owed its partners including Shell, ExxonMobil, Chevron, Total and Eni, to exit the cash call arrangement.

The nation was eyeing additional output of between 300,000 bpd and 700,000 bpd from onshore and shallow fields operated jointly with foreign partners over the next two years as a result of the financing deal, the spokesman for the Nigerian National Petroleum Corporation, Ndu Ughamadu, said.

“The Nigerian petroleum sector, which has recorded low investment in recent years, will soon experience an upbeat in a flurry of activities following the cash-call exit agreement between the NNPC and its Joint Venture partners,” he said.

“The agreement will stabilise and also increase upstream production over time. The repayment of the arrears in a sustainable manner is a key enabler to additional investment in the upstream sector in Nigeria,” the Chairman, Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry, Clay Neff, said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Economy

Fuel Scarcity: NUPENG to Commence Strike on Monday

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Petrol Importation

Lagosians Should Brace for Fuel Scarcity as NUPENG Embarks on Strike

Nigerians should brace for fuel scarcity as the national leadership of the Nigeria Union of Petroleum and Natural Gas (NUPENG) directed all petroleum tanker drivers to withdraw their services from Lagos State starting from Monday, 10 August 2020.

In a statement released by NUPENG on Friday, the union said the directive followed the failure of various authorities in Lagos State to address three major issues that had impacted the operations of petroleum tanker drivers in the state for several months.

The statement signed by the National President, Williams Akporeha and the General Secretary, Olawale Afolabi, NUPENG and titled title ‘NUPENG leadership directs withdrawal of services by petroleum tanker drivers in Lagos State with effect from Monday, August 10, 2020,’ noted that members of the union are frustrated and pained by the barrage of challenges faced while carrying out their activities in Lagos State.

NUPENG said, “The entire rank and file members of the union are deeply pained, frustrated and agonised by the barrage of these challenges being consistently faced by petroleum tanker drivers in Lagos State and are left with no other option but to direct the withdrawal of their services in Lagos State until the Lagos State Government and other relevant stakeholders address these critical challenges.

“It is sad and disheartening to note here that we had made several appeals and reports to the Lagos State Government and the Presidential Task Force for the decongestion of Apapa on these challenges but all to no avail.

NUPENG listed the major challenges faced by petroleum tanker drivers in Lagos State as extortion and harassment by various security agents and, area boys’ (miscreants).

This menace must stop and the leadership of these security operatives in Lagos State must go all out to call their men to order with immediate effect.

The Union added that it is sad that the security agents who were expected to ensure the free flow of traffic and protection of road users were the same people using their uniforms and arms to intimidate, harass and extort money from petroleum drivers in Lagos State.

Therefore, it said it had embarked on an indefinite strike to force the Lagos State Government to address the situation.

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NLC Gives Airlines Two Weeks to Reverse Mass Lay-offs

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Nigeria Labour Congress

NLC Goes After Bristow, Air Peace, Demands Reversal of Mass Lay-offs

The Nigeria Labour Congress on Friday rejected the recent sack of 100 Pilots by Air Peace, 70 Pilots by Bristow Helicopters and staff of the National Union of Air Transport union working with Turkish Air.

In a statement released by the Union, Mr. Ayuba Wabba, the President, NLC, described the action of the companies as “insensitive, callous and unjust”.

Earlier in the week, Air Peace, Nigeria’s largest carrier announced it would be letting go of 70 pilots as it struggles to curb the impact of COVID-19 on its finances.

This was followed by Bristow Helicopters’ announcement that it would be letting go of 100 Pilots and Engineers as it can no longer support them due to its decline in its financial position.

While the companies have blamed COVID-19 and lack of government support for their decision to cut costs to remain afloat, experts believed the decision was as a result of recent union activities of the affected staff.

Bristow staff had embarked on strike on Monday after talks between the Nigerian Association of Air Pilots and Engineers (NAAPE) and the management of the company broke down despite giving them three days strike warning.

Wabba said no worker should be sacked or penalised for participating in union activities.

He said, “The unilateral sack of executive members of the National Union of Air Transport Employees working with Turkish Airline is particularly distressing.

“These workers were sacked for fighting for the rights of Nigerian workers in Turkish Air.

“This is very reprehensible. We wish to remind Turkish Air that unionised workers cannot be punished or sacked for participating in trade union activities.

“This action is aimed at frustrating unionisation in Turkish Air and to enslave Nigerians working with Turkish Air.”

Wabba emphasised that the Union would not stop advocating for the dismissed workers. The President of NLC, therefore, called on the management of Turkish Air, Air Peace and Bristow Helicopters to reinstate all workers within two weeks.

He warned that failure to comply with the Union demand would be met with mas action across Nigeria’s workforce.

He said, “We call on the management of Turkish Air, Air Peace and Bristow Helicopters to reinstate all the sacked workers within two weeks.

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Economy

Brent Crude Oil Pulls Back to $44 Per Barrel

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Brent crude

Brent Drops from $46 Per Barrel to $44 on Friday

Brent crude oil, against which Nigerian oil is measured, pulled back on Friday morning during the New York trading session to $44 per barrel.

The commodity rose on Tuesday on hopes that the United States is working on a new economic stimulus package and signs that the world’s largest economy is making progress with COVID-19.

“Crude prices turned positive on stimulus hopes and after another positive round of economic data showed manufacturing recovery continued in June,” said Edward Moya, senior market analyst at OANDA.

Brent crude oil rose as high as $46.21 per barrel on Wednesday before pulling back to $44.47 per barrel on Friday amid concerns that the second wave of COVID-19 would eventually weigh on the demand for the commodity and disrupt whatever plans OPEC and allies have to curtail further decline in oil prices.

UKOilDailyUS Oil, West Texas Intermediate (WTI) crude oil declined from $43.49 per barrel it was sold on Wednesday to $41.35 per barrel on Friday.

However, experts think the new US stimulus would bolster market outlook and increase global oil demand with demand in consumer goods.

“Hopes are still running high for another round of fiscal stimulus,” said Stephen Brennock of oil broker PVM. “Failure to extend aid would deal a massive blow to the recovering U.S. economy and the fragile oil demand outlook.”

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