Oil prices gained more than 1% on Monday, as OPEC’s monthly market report allayed investor concerns about dwindling demand in the United States and China.
Brent crude prices were up $1.25, or 1.5%, at $82.68 a barrel as of 11:58 a.m. ET (16:58 GMT), while WTI crude futures were up $1.24, or 1.6%, at $78.41.
OPEC stated in a monthly report on Monday that oil market fundamentals remained solid and blamed speculators for the price dip. OPEC raised its 2023 projection for global oil demand growth somewhat but maintained its relatively high 2024 forecast.
“The OPEC monthly oil market report appeared to push back against demand concerns, referencing overblown negative sentiment around Chinese demand while raising demand growth forecasts for this year and leaving them unchanged for next,” said Craig Erlam, senior market analyst at OANDA.
Investors were concerned after the US Energy Information Administration (EIA) announced last week that the country’s crude oil production will climb somewhat less than previously predicted this year, while demand will fall.
Markets were also concerned about the probable tightening of US monetary policy after Federal Reserve Chair Jerome Powell stated last week that the central bank could hike interest rates again if inflation is not controlled.
Weak economic data from China, the world’s largest crude oil importer, fuelled concerns about dwindling demand last week. Chinese refiners requested reduced supplies from Saudi Arabia, the world’s largest exporter, for December.
Still, oil prices may have found a bottom after they slid about 4% last week and recorded their first three-week declining streak since May, said Fawad Razaqzada, an analyst at City Index.
“Given that oil prices have weakened in the last few weeks, Saudi Arabia and Russia will likely continue with their voluntary supply cuts into next year. This should therefore limit the downside potential,” Razaqzada said.
Last week, top oil exporters Saudi Arabia and Russia, part of the group known as OPEC+, confirmed they would continue with additional voluntary oil output cuts until the end of the year as concerns over demand and economic growth continue to drag on crude markets.
OPEC Pegs Nigeria’s Crude Oil Production At 1.5 Million Barrel Daily
*Petroleum Ministry’s Perm Sec, Amb. Aduda, Emerges Alternate Chair of Organisation’s Board of Governors*
Nigeria’s crude oil production for 2024 has been pegged at 1.5 million barrels Per Day.
The above is one of the major outcomes of the 36th OPEC and Non-OPEC Ministerial Meeting, which ended in Austria, Vienna, on Thursday.
Oluwakemi Ogunmakinwa, Deputy Director and Head of the Press and Public Relations Unit in the Ministry of Petroleum Resources, reports that during the meeting,which had in attendance the Ministry’s Permanent Secretary,Amb.Gabriel Aduda,significant strides were made towards maintaining a stable and balanced oil market by member States of the Organisation.
According to information made available to the public by the Ministry,participating countries at the meeting emphasized commitment to the Declaration of Co-operation and reaffirmed their dedication to the framework established since the inception of the Declaration of Co-operation on December 10,2016.
This commitment, which the participating countries have consistently endorsed in several meetings, including the 35th OPEC and Non-OPEC Ministerial Meeting held on June 4 earlier in the year,has been further strengthened through the Charter of Co-operation the countries ratified on July 2,2019.
Going further, the release also revealed that the 36th OPEC and Non-OPEC Ministerial Meeting also addressed crucial aspects of the Organisation’s operational mandate, including the completion of assessments by independent sources on the 2024 projected production levels for Angola, Congo as well as Nigeria.
The assessments, the release emphasized, concluded production estimates for Angola at 1.11 Million Barrels Per Day;277 Thousand Barrels Per Day for Congo and 1.5 Million Barrels Per Day for Nigeria. These figures the release noted were in alignment with prior decisions set forth at the 35th OPEC and Non-OPEC Ministerial Meeting earlier held in June.
Part of the highlights of the 36th OPEC and Non-OPEC Ministerial Meeting was the warm reception accorded the Brazilian Minister of Mines and Energy, Alexandre Silveira de Oliveira. Brazil had earlier announced its forthcoming inclusion in the OPEC+ Charter of Co-operation with effect from January 2024.
The 37th OPEC and Non-OPEC Ministerial Meeting, the release also informed,has been scheduled for Vienna, Austria on June 1,2024.
Meanwhile, in a related development, OPEC Governor of Nigeria and Permanent Secretary in the Ministry of Petroleum Resources, Amb. Gabriel Aduda has emerged the Alternate Chairman of OPEC Board of Governors for the year 2024.This was a major decision of the 187th meeting of the Conference of OPEC members during which Libya’s Mohammed Oun was also announced Chairman of the Board for the incoming year.
The release also stated that the gathering used the opportunity to dispell all speculations of discord among OPEC countries with regard to the acceptance or otherwise of the 2024 crude oil production quotas aimed at fortifying market dynamics, fostering stability as well as sustainable growth within the industry.
Minister Identifies Modular Refineries Quickest Way To Fix Nigeria’s Energy Problem
Nigeria’s Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri has said that the fastest way to fix Nigeria’s energy challenge is through modular while the big refineries are being comprehensively revamped.
This is just as he commended Waltersmith Group and the Nigerian Content Development and Monitoring Board (NCDMB) for supporting the Federal Government’s agenda of improving domestic refining capacity.
The minister expressed his satisfaction toward the company and NCDMB for taking the bull by the horns to commence local refining of crude and partially meeting the demand of the locals.
Lokpobiri spoke during a facility tour of Waltersmith Petroman Oil Limited, Ibigwe, Ohaji-Egbema Local Government Area of Imo State, on Tuesday, according to a statement issued by the Corporate Communications of NCDMB on Wednesday evening.
“The quickest way to fix our energy challenge in the country should be through modular refineries, while we await the total rehabilitation of the big refineries”, he said.
He noted that the 5,000-barrel per stream day Waltersmith Petroman had been a stable source of diesel, kerosene, naphtha, and high-fuel oil to the domestic market since its commissioning in 2020 and that it indicated proof of how beneficial such smaller processing plants could be.
Lokpobiri commended the NCDMB for taking up equity in Waltersmith Refinery which quickly facilitated the completion of the modular refinery.
While also lauding Waltersmith Group, he charged companies who had been given the license for modular refineries and marginal field licenses to take cues from Waltersmith and make deliberate investments.
He said, “If you have a marginal field, an allocation, it is a paper given to you, it doesn’t add value to you or Nigeria unless you take it to the next level by making the requisite investment and then adding the value that is expected.
“What I am seeing is that out of the numerous marginal fields that were allocated, only Waltersmith and a few of them have been successfully driven,” he stated, recalling that he had sounded a warning at the recent Nigeria Economic Summit Group (NESG) event in Abuja that marginal field allocations without the requisite investments stand the risk of being canceled.
Explaining the imperative of such a line of action, the minister said, “It is important that we make this point so that we can retrieve some of those fields to the basket,” to reallocate such assets to those able and prepared to develop and exploit them to the benefit of the industry and the nation.
He revealed that he had obtained presidential approval to conduct a fresh round of bidding, which would take place soon, promising that “marginal fields would (henceforth) be prioritised in terms of their location to those who have modular refineries so that they will be able to produce.”
While acknowledging the remarkable success story of Waltersmith, whose management had announced plans for further expansion, Lokpobiri said, “I can assure you that this Government will do whatever we can to support you so that you can continue to grow.”
Similarly, he praised the NCDMB whose direct involvement through equity participation, greatly facilitated the take-off and operations of the refinery.
In his remarks, the Executive Secretary of NCDMB, Simbi Wabote said the decision of the board to participate as an equity holder in Waltersmith was informed by its sense of mission and the impressive organizational arrangement within the company.
According to him, NCDMB had no hesitation to partner with Waltersmith, “given the very clear corporate governance that is required and exists within the company,” adding that “part of our mandate is to enhance development and we see ourselves as catalysts for the industrialisation of Nigeria.”
“At NCDMB, we are proud of what we have achieved here (at Waltersmith),” he declared.
The President and Group Chief Executive Officer of Waltersmith Petroman Oil Limited, Mr. Abdulrasaq Isa, said part of the expansion plans of the company was to raise the capacity of the processing plant from the present 5,000 to 40,000 barrels per stream day and to be able to produce two million tonnes of petroleum products per annum.
The refinery has so far supplied a total of 600 million litres of petroleum products to the Nigerian market since its commissioning in 2020.
Host Communities Threaten To Shutdown Oil Production Over 3% PIA Fund
Oil communities in Bayelsa State have threatened that oil production across the state may be halted if the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) fails to refrain from actions that could potentially reduce or create bottlenecks for the three percent host community fund under the Petroleum Industry Act (PIA).
This was convened in a statement jointly signed by a foremost youth leader, Mr Christopher Tuduo, His Royal Highness, Theophilus Moses, chairman of Dodo River Rural Development Authority, Francis Amamogiran, Hon. Target Segibo of Oporoma Rural Development Authority and former Chairman of Koluama Clan Oil and Gas Committee, Engr Ebimielayefa Dick- Ogbeyan.
The communities, in the statement, issued a firm warning, declaring their readiness to take decisive action and escalate their efforts to address the concerns of the oil and gas communities if the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) fails to treat the matter as an emergency.
Emphasizing their proactive engagement in pacifying the youths across various communities since the signing of the Petroleum Industry Act (PIA), they underscored that the stability of oil operations could be compromised if NUPRC allows the situation to deteriorate further.
The communities asked NUPRC to recognize the urgency of the matter and take immediate, substantive steps to resolve the concerns at hand.
They warned that improper handling of host community issues could have negative repercussions on Nigeria’s oil production and economy.
The communities stated that the NUPRC must reverse any action and regulations adversely affecting the host community to avoid a severe backlash.
He noted that host communities are often excluded from the decision-making process, which results in the use of public resources to defend decisions in newspapers.
They criticized NUPRC’s intention, outlined in a letter dated 9th October 2023, and signed by Capt. John R. Tonlagha for the Commission Chief Executive, which proposed participation in various activities related to the host community fund, such as BOT nominations, selection, and inauguration, Management Committee Advisory Committee nomination and selection, and facilitation of NEED assessment. He argued that this would be too much for the three percent to fund.
The group maintained that while NUPRC’s oversight function is essential, over-involvement in the activities of the HCDTs is counterproductive and financially burdensome.
“They are getting into the operations arena, and this will not augur well for the industry because each participation by the NUPRC will be funded from the HCDT trust.”
They also criticized the mandate for HCDTs to hire lawyers and accountants with a minimum of 10 years of experience, stating that it would be impossible to pay such professionals from the five percent administrative fund, which comes from the three percent.
They argued, “In reality, no NGO organizations, including those like Accord or the Nigerian Conservation Foundation, which is one of the most successful NGOs in Nigeria, employ full-time lawyers, let alone one with 10 years experience. The HCDTs are styled as NGO organizations and should be expected to act according to the best practices and standards of that sector.”
The statement stressed further insisting that NUPRC must stop overstepping its boundaries, avoid acting as operators, and cease deducting expenses from the three percent in cunning ways.
The group supports transparency and accountability, but the HostComply portal being developed by NUPRC to manage the administration of the fund should not be funded from the three percent, as per Sele-Epri.
He stated that the regulator should bear the financial burden for the application, which enables it to monitor the activities of different players more effectively.
Additionally, the group accused the regulator of insensitivity to the host communities’ concerns, particularly the allocation in the PIA and the criminalization of oil and gas asset destruction against communities lacking surveillance contracts.
They questioned the timing of NUPRC’s review of host community regulations, suggesting that the focus should be on setting up HCDTs and prioritizing benefits to the community.