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Displaying items by tag: Nigeria Oil Production

Analysts predict further losses on bargain hunting
At the end of yesterday’s transactions on the equity sector of the Nigerian Stock Exchange, the NSE All-share index and market capitalization depreciated by 2.74 per cent to close the week at 37,862.53 and N13.716 trillion respectively.
  
Similarly, all other indices finished lower with the exception of the NSE Insurance Index that appreciated by 3.55 per cent, while the NSE ASeM Index closed flat.Meanwhile, a total turnover of 1.097 billion shares worth N15.471 billion were recorded  in 16,288 deals by investors on the floor of the Exchange in contrast to a total of 1.738 billion shares valued at N18.462 billion that was exchanged hands in 14,790 deals during the preceding week.
  
The drop in tutnover may, however be attributed to the one day holiday declared on Monday June 18th,  2018 to commemorate the Eid-al-Fitr celebrations.Specifically, the financial services industry (measured by volume) led the activity chart with 816.547 million shares valued at N9.425 billion traded in 9,263 deals; thus contributing 74.44% to the total equity turnover volume .
  
The consumer goods industry followed with 76.361 million shares worth N2.992 billion in 2,545 deals. The third place was occupied by the oil and gas industry with a turnover of 51.600 million shares worth N594.590 million in 1,744 deals.Trading in the top three equities namely – United Bank for Africa Plc, Zenith International Bank Plc and FBN Holdings Plc (measured by volume) accounted for 325.580 million shares worth N4.854 billion in 3,381 deals, contributing 29.68% to the total equity turnover volume.
  
Analysts at vetiva Reseatch said: “Sentiment this week was largely bearish, characterized by huge losses in select large caps. Though there is still some room for further losses, we foresee bargain hunting at week open as investors take position on depressed stocks.”
  
Further breakdown of last weeks trading showed that  a total of 61 units of Exchange Traded Products (ETPs) valued at N899.80 executed in seven deals last week, compared with a total of 62,392 units valued at N1.004 million that was transacted last week in 13 deals.
  
A total of 370 units of Federal Government valued at N371,261.96 were traded this week in 3 deals, compared with a total of 9,850 units valued at N9.999 million transacted last week in 10 deals.
  
25 equities appreciated in price during the week, lower than 40 in the previous week. 44 equities depreciated in price, higher than 28 equities of the previous week, while 100 equities remained unchanged lower than 101  equities recorded in the preceding week.
 
Credit: Sunday Times
Published in Opinion & Analysis
Investors looking for a haven amid the rout in emerging markets over the past two months would have found one in Nigeria’s domestic debt.
 
Naira bonds issued by the government have returned 8.4 percent in dollar terms this year, the most in the Bloomberg Barclays Global EM Local Currency Index, which includes 25 countries from Argentina to Turkey. And it’s the only local-currency debt not to have made losses this quarter.
 
Nigeria's local bonds have outperformed peers since March
 
Note: Average total return for government local debt in dollar terms
 
Franklin Templeton Investments and BlackRock Inc. are among global money managers that are bullish on Nigerian securities, enticed by average yields of 13.4 percent, which, while down from almost 17 percent in August, are still among the highest in the world.
 
They’re also confident the OPEC member will be able to keep the naira stable, thanks in part to oil prices having climbed around 60 percent in the past year. The naira’s barely budged since a devaluation last year, and held its own as other emerging currencies began to tumble in April. The Abuja-based central bank is keen to keep it that way, at least until February’s elections.
 
South: Bloomberg News
Published in News Economy
The United States’ Energy Information Administration (EIA) forecasts that Brent crude oil prices will average $71 per barrel in 2018 and $68 a barrel in 2019. Meanwhile, Nigeria’s Bonny Light crude oil has maintain an international price of $73.44 per barrel, higher than the Organisation of the Petroleum Exporting Countries (OPEC) basket price of $73.35 per barrel.
The price of Nigeria’s Bonny Light is higher than the Nigeria’s $51 per barrel benchmark for 2018 budget.EIA in its Monthly Oil Market report for May, expects oil prices to decline in the coming months because global oil inventories are expected to rise slightly during the second half of 2018 and in 2019.The updated 2019 forecast price is $2 a barrel is higher than in the May forecast, which sold for an average price of $77 a barrel, an increase of $5 per barrel from April and the highest monthly average price since November 2014.
 
Even though the 2019 oil price forecast is higher than it was in the May monthly report, EIA expects oil prices to decline in the coming months because global oil inventories are expected to rise slightly during the second half of 2018 and in 2019.According to EIA, expected inventory growth results from forecast oil supply growth outpacing forecast oil demand growth in 2019.
 
EIA currently forecasts global petroleum and other liquids inventories will increase by 210,000 barrels per day (b/d) next year, a factor that, all else being equal, typically puts downward pressure on oil prices.Most of the growth in global oil production in the coming months is expected to come from the United States.
 
EIA projects that U.S. crude oil production will average 10.8 million barrels per day for full-year 2018, up from 9.4 million barrels per day (bpd) in 2017, and will average 11.8 million bpd in 2019.
 
The agency noted that if the 2018 and 2019 forecast annual averages materialize, they would be the highest levels of production on record, surpassing the previous record set in 1970.EIA expects that OPEC crude oil production will average 32.0 million b/d in 2018, a decrease of about 0.4 million bpd from the 2017 level.
 
The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, expressed optimism that the price of crude oil would rise to a level that is neither too high nor too low.The Minister said though crude oil appears to have fallen into bad times because of prevailing low price and the campaign against the use of fossil fuels for environmental reasons, the product would soon rise up to take its place as the prime global energy source.
 
Waxing poetic message on the current crude oil prices recently, Kachikwu stated: “My name is oil, those who are kind to me call me black gold. Those who hate me call me crude.“I worry for my future; everyone now talks down on me. Even farmers who trembled at the sight of my name are now strategizing against me.“And all my beneficiaries, me have they abandoned, all because producers have lost their tracks. But I will rise again, and when I do, I will take no prisoners.
 
“I will new technologies control; I will my supremacy confirm; I will my respect regain.“And my pricing, not too low, not too high; but I will not allow prices to humiliate me. All of you in OPEC, APPA, GCEF and all such bodies who have shown me no respect recently, soon, you’ll eat your words.”
 
Source: The Guardian
Published in News Economy

Nigeria is seeking to amend a law on deep offshore oil exploration and drilling, aiming to increase government revenue from crude sales when prices exceed $20 a barrel, the country’s oil minister said lastweek.

Nigeria’s government relies on oil for around two-thirds of its revenue and Africa’s largest economy is still largely dependent on crude production despite the current administration’s attempts to diversify away from the industry. Those efforts have yielded few results, economic data shows.

Under the deep offshore act, there was a provision in 1993 that allowed for the government to charge oil companies a premium for the administration’s share of sales once the price of crude exceeded $20 a barrel.

The Nigerian government has not enforced that provision but could now look to amend the law to enable it to do so, Emmanuel Ibe Kachikwu, the oil minister, told reporters after a cabinet meeting in the capital of Abuja.

“The net effect for us is close to $2 billion extra revenue for the federation,” Kachikwu said, adding that the petroleum ministry was working with the attorney general to look at the legislation. “From 1993 to now, cumulatively, we have lost a total of $21 billion just because government did not act. We did not exercise it,” he said of the law, without explaining what amendment was needed.

The oil minister noted it would be difficult to recoup past losses, given oil companies that were not paying the government a premium for sales over $20 a barrel were not breaking the law.

However, the administration will explore whether there is an opportunity to get back some of the money, Kachikwu added. The government is also pushing to have Nigeria’s three main oil refineries up and running at full capacity by 2019, the oil minister said.

Despite producing vast quantities of crude oil, Nigeria exports almost all of its crude for refining overseas before paying to have the final fuel products imported, a drain on foreign currency reserves. The administration hopes to raise $2 billion for the refurbishment of the refineries from the private sector, and have them producing around 425,000 barrels of oil per day by the end of 2019, said Kachikwu.

Nigeria’s reliance on oil sales led to it falling into recession last year largely due to low crude prices and attacks by militants on energy facilities in the southern Niger Delta production heartland.

The OPEC member emerged from the recession - its first in 25 years - in the second quarter of 2017 as a result of higher oil receipts.

 

(Reuters)

Published in Engineering

EVEN as legislators commenced preliminary debates on fundamental of 2018 budget appropriation bill, trouble appears looming from external quarters with OPEC insisting on cutting Nigeria’s oil production to 1.8 million barrels per day.

The bill is predicated on daily oil production of 2.3 million barrels per day at $45 per barrel. While prices continue to float above $60 per barrel in the last few months, authorities say production remains just above 2 million barrels per day.

OPEC oil ministers and other producers are due to meet today in Vienna to discuss extending a deal that has so far reduced crude oil production by 1.8 million barrels per day (bpd) and helped boost oil prices by 40 percent since the middle of the year. The deal between most OPEC members and other major exporters including Russia is scheduled to expire in March 2018.

Sources familiar with OPEC talks said the group may debate capping Nigerian and Libyan output at 1.8 million bpd and 1 million bpd respectively, having exempted the two countries so far due to unrest and lower-than-normal production volumes. Russia has signaled it wants to understand better how producers will exit from the cuts as it needs to provide guidance to its private and state energy companies. Luaibi said there had been a little discussion so far on any exit strategy.

Some Russian producers including Rosneft, run by an ally of President Vladimir Putin, Igor Sechin, have questioned the rationale of prolonging the cuts, saying it will lead to a loss of market share to U.S. firms, which are not reducing output.

OPEC, which comprises 14 countries, has traditionally been much less worried about exit strategies as its members have been known for reducing compliance and cheating on their quotas towards the expiry of such deals. “OPEC and Russia will both realize they are losing market share and they will be better off going back to a more competitive environment,” the head of commodity research at Citi, Ed Morse, told Reuters.

Citi’s rival Goldman Sachs said in a note on Tuesday: “We continue to expect a gradual ramp-up in OPEC and Russian production from April onward.”

OPEC and Russia look set to prolong oil supply cuts until the end of 2018 this week while signaling that they may review the deal when they meet again in June if the market overheats. With oil prices rallying above $60 per barrel, Russia has questioned the wisdom of extending existing cuts of 1.8 million barrels per day (bpd) until the end of next year as such a move could prompt a spike in U.S. production.

Russia needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude. Six ministers from OPEC and non-OPEC oil producers including Saudi Arabia and Russia will gather in Vienna on Wednesday – one day ahead of a full OPEC meeting – to review recommendations by their delegates.

On Tuesday, a joint OPEC/non-OPEC committee recommended extending cuts until the end of 2018 with an option of reviewing the arrangement at the next OPEC meeting in June, three sources from the Organization of the Petroleum Exporting Countries said. However, oil prices slipped on Wednesday as doubts set in about Russia’s willingness to substantially extend a deal among some of the world’s biggest exporters to curb output to help tackle global oversupply and support prices.

Brent crude futures were down 22 cents on the day at $63.39 a barrel by 1147 GMT, while U.S. light crude fell 25 cents to $57.74 a barrel. Moscow fears that a strong price rally off the back of such a move could give an unsustainable boost to the rouble, one that harms Russian exports.

It could also trigger an increase in U.S. production, which has already been rising significantly and offsetting the OPEC-led cuts to some extent. 

A report from the American Petroleum Institute (API) on Tuesday showed a weekly rise in U.S. crude inventories of 1.8 million barrels, confounding expectations for a 2.3 million barrel drop. “The market had been looking forward to a supportive number due to the pipeline disruption from Canada,” said Ole Hansen, senior manager at Saxo Bank. “But nevertheless the overall level of inventory still managed to climb.”

A price rise generated by the shutdown of the Keystone pipeline, which supplies Canadian crude to the United States, turned out to be short-lived, with an announcement on Tuesday of a gradual restart to operations.

Published in Economy
  1. Opinions and Analysis

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