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Economy

Oil edges up amid OPEC cuts, U.S. sanctions against Venezuela, Iran

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Oil

U.S. West Texas Intermediate (WTI) crude oil futures were at 56.45 dollars per barrel at 0234 GMT, up 23 cents, or 0.4 per, from their last settlement.

Brent crude futures were at 66.36 per barrel, up 37 cents, or 0.6 per cent.

Prices are being supported by efforts led by the Organisation of the Petroleum Exporting Countries (OPEC) and other countries – a grouping known as ‘OPEC+’ – to withhold around 1.2 million barrels per day (bpd), a strategy designed to tighten markets.

“In our view, OPEC’s strategy is to rebalance the market as quickly as possible and exit the cuts by the end of June in order to grow production alongside shale producers in the second half of this year,” U.S. investment bank Goldman Sachs said in a note on Wednesday.

U.S. sanctions against the oil industries of OPEC members Iran and Venezuela have also had an impact, traders said.

Venezuela’s state-run oil firm PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil amid the sanctions.

Despite these factors, oil remains in plentiful supply thanks to surging U.S. production.

U.S. crude oil stockpiles rose much more than expected last week, with inventories up by 7.1 million barrels to 452.93 million barrels, according to a weekly report by the U.S. Energy Information Administration (EIA) on Wednesday.

Meanwhile U.S. crude oil production remained at a record 12.1 million bpd, an increase of more than 2 million bpd since early 2018.

That, along with the easing of a transportation bottleneck for low-cost U.S. Permian Basin shale oil, could produce sequentially higher production, Goldman Sachs said.

“The balance between rising U.S. production and the OPEC+ efforts to stabilize prices with a production cut was broken by higher than expected U.S. inventories and the OECD warning of lower global growth impacting energy demand going forward,” said Alfonso Esparza, senior analyst at futures brokerage OANDA.

Foreign

Putin, Trump discuss G7 summit, oil markets over phone

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Russian President Vladimir Putin had a phone conversation with his United States counterpart Donald Trump at the initiative of the United States side, discussing issues related to the Group of Seven (G7) Summit and oil markets, the Kremlin said Monday.

“Trump informed Putin about his idea of holding a G7 summit with the possible invitation of the leaders of Russia, Australia, India and South Korea,” it said in a statement.

The importance of enhancing the bilateral dialogue on strategic stability and confidence-building measures in the military sector was noted.

In addition, the presidents addressed world oil market developments in the context of implementing the OPEC+ agreement.

“It was stated that this multilateral agreement, reached with the active support of the presidents of Russia and the United States, would lead to a gradual restoration of oil demand and price stabilization,” it said.

Putin and Trump also touched upon space cooperation and fighting coronavirus, agreeing to continue contacts at various levels, according to the statement.

(XINHUA)

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Politics

Senate raises concern over high cost of crude oil production in Nigeria

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The Senate on Monday expressed concern over the high cost of crude oil production by the Nigeria National Petroleum Corporation (NNPC).

It said despite the high cost of producing crude oil, Nigeria was not getting much in return on its investment in crude oil production.

Solomon Adeola, Chairman, Senate Committee on Finance, made the observation at an interactive session on Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Papers (FSP) with officers of Ministry of Finance, Budget and National Planning.

Other agencies of government in attendance at the meeting inlcuded revenue generating agencies such as, NNPC, Nigeria Customs Service and Federal Inland Revenue Services (FIRS) among others.

Adeola said: “I want you to take us through why  Nigeria’s cost of production per barrel of crude oil is  the most expensive in the world.

“Give us the breakdown of what constitutes those costs into variables and the technical cost.

“We want to know what you are doing as an agency of government to bring down this cost,” he said.

He said the committee was interested in ascertaining other costs of crude production in terms of administrative cost.

“Who determines this cost, with the benchmark of 25 dollars as proposed, Nigeria is just going to have just three dollars as its own return on investment.

“The oil revenue and the mineral revenue as proposed in the MTEF has dropped from almost N8.86 trillion to N3.33 trillion, are you saying that it is worthwhile investment for us as a nation.

“How do you ensure that Nigeria is being charged the right cost on each barrel of oil.

In Saudi Arabia, it is four dollars per barrel cost of production, in Russia it is about three dollars per barrel, Nigeria is 21 dollars.

“We are beginning to be afraid as to why we are channeling all our efforts to this oil and gas if the return on investment is nothing to write home about,” he said.

Sen. James Manager (PDP Delta) said the reason adduced by NNPC for the cost of production was not tenable.

“Because wherever oil is produced, they have their own security challenge even Saudi Arabia, Iran Russia, they have their own unique security issues.

“How is our own so peculiar that our cost of production is up to 21dollars per barrel.

“You also mentioned administrative issue, which are those administrative issues, why are we different from the rest of the world.

“These are issues that the national assembly is supposed to take up,” he said.

Sen. Jibril Isah (APC Kogi) said:”I am disturbed because, I expected the NNPC to dwell more on fixed costs but surprisingly, you are talking about administrative cost, security, these are variables.

“Even the fixed cost on the long run are also variables which you can also work on,” he said.

The Group Managing Director of NNPC, Mr Mele Kyari said the NNPC was working hard to bring down the fixed cost of crude oil production.

Kyari, represented by the Chief Operating Officer of NNPC, Upstream,Mr Yemi Adetunji said further:

“We know that these costs are high that is why we have decided to go from even the initial approved 25 dollars to 21 dollars per barrel.

“We believe that once we have the new framework in place going forward, we shall even see lower cost of production from T1 and T2.

“There are things we are targeting; security challenges are peculiar to Nigeria.

“In other climes,  pipelines are on the surface you hardly see them being  tampered with,  but in Nigeria even when they are buried two meters to three meters deep they are still being vandalised.

” In some cases, we are trying to take them to deeper levels but those ones will add to cost of production like going 10 meters to 15 meters deep.

“This adds to the cost about three or four times the cost of production as against putting the pipelines on the surface,” he said.

He said NNPC was working with security agencies to ensure that security hitches responsible for high cost were brought down to the minimum.


Edited By: Chioma Ugboma/Ekemini Ladejobi (NAN)

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Economy

Oil prices edge down as wary traders eye upcoming OPEC+ meeting

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Oil prices edged down on Monday as traders took profits, with the Organisation of the Petroleum Exporting Countries (OPEC) considering meeting as soon as this week to discuss whether to extend record production cuts beyond end-June.

Brent crude LCOc1 fell 15 cents, or 0.4 per cent, to $37.69 a barrel, in the first day of trading in the contract with August as the front month.

West Texas Intermediate (WTI) crude futures CLc1 for July delivery were at $35.36 a barrel, down 13 cents, or 0.4 per cent, by 0419 GMT.

The price falls come after front-month Brent and WTI prices posted their strongest monthly gains in years in May.

Gains were boosted by OPEC crude production dropping to its lowest in two decades, with demand expected to recover as more nations emerge from coronavirus lockdowns.

“The focus is very much on OPEC+,’’ OCBC economist, Howie Lee, said, referring to OPEC and its allies including Russia.

OPEC+ agreed in April to reduce output by an unprecedented 9.7 million barrels per day (bpd) in May and June after the coronavirus pandemic ravaged demand.

“We might see a cautious pullback in (crude) prices given that downstream prices haven’t caught up … but if OPEC+ does come up with a three-month extension, there’s a possibility that prices may hit the $40 level,’’ Lee said.

Still, tensions between the United States and China weighed on global financial markets, while traders are also keeping an eye on riots over the weekend that have engulfed major United States cities.

Saudi Arabia is proposing to extend record cuts from May and June until the end of the year, but has yet to win support from Russia, sources have told Reuters.

Algeria, which currently holds the OPEC presidency, has proposed that an OPEC+ meeting planned for June 9-10 be brought forward to facilitate oil sales for countries such as Saudi Arabia, Iraq and Kuwait.

Russia has no objection to the meeting being brought forward to June 4.

“It’s been widely interpreted as likely to lead to an extension of the current production cuts,’’ CMC Markets’ Chief Market Strategist, Michael McCarthy, said.

“Oil prices have come down slightly in our session but they’re still at elevated levels.

“I suspect that’s the key driver of prices on Friday night and should keep prices reasonably well supported today.’’

Meanwhile supply in North America is also falling as data from Baker Hughes Co showed that the United States and Canada oil and gas rigs count dropped to a record low in the week to May 29.

AIB


Edited By: Abdulfatah Babatunde (NAN)

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Foreign

Lebanon postpones oil, gas licensing deadlines amid COVID-19 outbreak

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Lebanon postponed on Sunday the deadline for submitting offers for the country’s second licensing round for offshore oil and gas exploration in five blocks amid the COVID-19 outbreak, the National News Agency reported.

The new date will be specified later this year, said the report.

“The outbreak of COVID-19 all over the world has devastating effects on the petroleum sector, leading to low demand for oil and gas and a sharp decline in the prices of these two commodities,” said a statement by the Energy Ministry.

The statement explained that the coronavirus hit the financial and logistical capabilities of oil-mining companies, prompting these companies to reduce their investments in such projects.

Lebanon launched in April 2019 the second licensing round for offshore oil and gas exploration in five blocks.

In February 2018, Lebanon signed its first offshore oil and gas exploration and production contracts for two energy blocks with a consortium of France‘s Total, Italy‘s Eni and Russia‘s Novatek.

(XINHUA)

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Foreign

Spotlight: NASA, SpaceX launch first crewed mission from U.S. soil since 2011

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Two NASA astronauts took off from U.S. soil on Saturday, riding aboard SpaceX‘s Crew Dragon spacecraft in a historic test flight to the International Space Station (ISS).

The mission, dubbed Demo-2, is the first crewed launch to orbit from U.S. soil since NASA‘s shuttle program ended in 2011, and also the first-ever manned space launch by a private company, ushering in a new era of U.S. space exploration.

The Crew Dragon spacecraft lifted off on a SpaceX Falcon 9 rocket at 3:22 p.m. Eastern Time, from historic Launch Complex 39A at the Kennedy Space Center. Veteran NASA astronauts Bob Behnken and Doug Hurley are co-commanders on the mission.

Launch Complex 39A has served as backdrops for America’s most significant manned space flight endeavors, including Apollo 8, Apollo 11 and Space Shuttle Columbia.

U.S. President Donald Trump and Vice President Mike Pence watched the launch at the center.

“It’s incredible, the technology, the power. I’m so proud of the people at NASA, all the people that worked together, public and private. When you see a sight like that it’s incredible,” Trump said after the launch at the space center.

Pence said none of this would have been possible without the personal courage and the unflinching skill of the two American astronauts.

NASA Administrator Jim Bridenstine tweeted, “For the first time in 9 years, we have now launched American astronauts on American rockets from American soil. I’m so proud of the NASA and SpaceX team for making this moment possible.”

NASA confirmed main engine cutoff and separation of the rocket’s first and second stages minutes after the lift-off.

Falcon 9‘s reusable first stage booster has successfully landed on the “Of Course I Still Love You” drone ship off the Florida coast.

The Crew Dragon reached Earth orbit about 12 minutes after takeoff, and is making its way to the ISS, according to NASA.

The spacecraft is scheduled to dock to the space station on Sunday at 10:27 a.m. Eastern Time. The spacecraft is designed to do this autonomously, but the two astronauts and the station will be monitoring approach and docking, and can take control of the spacecraft if necessary.

After successfully docking, Behnken and Hurley will be welcomed aboard station and will become members of the Expedition 63 crew. They will perform tests on Crew Dragon in addition to conducting research and other tasks with the space station crew.

The mission will conclude with the Crew Dragon undocking from the station, deorbiting, and returning Behnken and Hurley to Earth with a safe splashdown in the Atlantic Ocean, according to NASA.

The mission duration has not been announced yet. NASA said it will be determined once on station based on the readiness of the next commercial crew launch.

Behnken and Hurley were among the first astronauts to begin working and training on SpaceX‘s next-generation human space vehicle, and were selected for their extensive test pilot and flight experience, including several missions on the space shuttle, according to NASA.

Behnken will be the joint operations commander for the mission, responsible for activities such as rendezvous, docking and undocking, as well as Demo-2 activities while the spacecraft is docked to the ISS.

Hurley will be the spacecraft commander for the mission, responsible for activities such as launch, landing and recovery.

It is the first-ever crewed mission for SpaceX since its founding 18 years ago, and the first time ever that a privately developed spacecraft launched humans into Earth’s orbit.

Since the final flight of NASA‘s space shuttle program in July 2011, the space agency has relied on Russian Soyuz rockets and spacecraft to get its astronauts to and from the ISS. Since then, NASA, SpaceX and Boeing have been working for years to end that dependence.

In 2014, the two companies signed multibillion-dollar contracts with NASA‘s Commercial Crew Program to finish development of their astronaut taxis and fly six operational crewed missions to and from the orbiting lab.

The Crew Dragon has reached the ISS once before, on the uncrewed Demo-1 mission in March 2019. Demo-2 is the first orbital human mission to launch from the United States.

This is SpaceX‘s final test flight for NASA‘s Commercial Crew Program and will provide critical data on the performance of the Falcon 9 rocket, Crew Dragon spacecraft, and ground systems, as well as in-orbit, docking and landing operations.

The test flight also will provide valuable data toward certification of SpaceX‘s crew transportation system for regular flights carrying astronauts to and from the space station.

SpaceX currently is readying the hardware for the first space station crew rotational mission, which would happen after data from this test flight is reviewed for certification, according to NASA.

(XINHUA)

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General news

Ondo Assembly calls for review of oil palm company policies

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The Ondo State House of Assembly has called on the state government to review its policies and invest more on Araromi/Ayesan Oil Palm Plc, in Araromi Obu.

It said this was necessary in order to generate funds to the government coffer and create job opportunities for its citizenry.

Mr Olalekan Elegbeleye, the Chairman of the House Committee on Commerce and Industry, stated this during the committee’s oversight visit to the company on Friday in Araromi Obu in Odigbo Local Government area of the state.

Elegbeleye said that the palm oil company was a huge and useful asset, making revenue to the government.

He explained that there was need for government to pay more attention to it since the current administration was ready to invest in agriculture.

According to him, the palm seedlings needed by the company should be improved.

The Chairman said that security apparatus of the company would be strengthened.

Elegbeleye lauded the efforts of late sage, Obafemi Awolowo, for establishing the company and others for the future of youths of Southwest region, saying that such investment had reduced unemployment rate in the state.

 He said that the committee was encouraged by the company’s management efforts that kept it functioning.

Similarly, Mr Ademoye Aderoboye, a member of the committee, said that the company has been contributing meaningfully to the state government.

Aderoboye noted that there was need to improve on the subvention given to the company in order to cater for welfare of workers so that there would be increased productivity.

He promised that appropriate security would be provided so that the state could continue to benefit from the company.

Earlier, Mr Sola Ikumawoyi, the General Manager, said that the company was virile and could alleviate poverty and impact development of the state.

Ikumawoyi noted that the company had gone through transformation since its establishment, saying that the company’s current management had got improved seedlings from Thailand.

He added that the company had 500 direct staff as it was yearning to expand its workforce to 800 direct workers.

According to him, the company has 950 effective hectares of palm trees and has commenced gradual replacement of old palm trees.

Ikumawoyi said that the company needed more funds to operate, stressing that the company relied on diesel which cost five million naira per month since there was no power supply to the company.

“We have several challenges such as insecurity, inadequate funds and continued power outage.

“Some people do cart away our seeds and the stealing is still on-going though police are helping us,” he said.

Edited By: Abiemwense Moru/Ekemini Ladejobi (NAN)

 

 

 

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Economy

Oil prices fall as U.S. fuel demand remains weak

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Oil prices edged lower on Friday after the U.S. inventory data showed lacklustre fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets.

Brent crude slipped 25 cents, or 0.7 per cent, to $35.04 a barrel by 0334 GMT and the U.S. West Texas Intermediate crude was at $33.18 a barrel, down 53 cents, or 1.6 per cent.

Still, both contracts are set for a fifth weekly gain, helped by production cuts and optimism about demand recovery in other countries.

“The rally needs a breather.

“It has been four weeks of gains and the market needs to buy time for downstream prices to catch up,’’ OCBC economist, Howie Lee, said.

“Beyond the short term, the bullish momentum still looks rather intact.’’

Thursday’s data from the Energy Information Administration showed that the U.S. crude oil and distillate inventories rose sharply last week.

Fuel demand remained slack even as various states lifted travel restrictions they had imposed to curb the coronavirus pandemic, analysts said.

Memorial Day weekend did not bring the U.S. motorists out in droves like many market bulls were hoping,’’ RBC Capital Markets analyst, Christopher Louney, said in a note.

Looking ahead, traders will be focusing on the outcome of talks on output cuts between members of OPEC+, the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia, in the second week of June.

Saudi Arabia and some OPEC members are considering extending record production cuts of 9.7 million barrels per day beyond June, but have yet to win support from Russia.

AIB

Edited By: Abdulfatah Babatunde (NAN)

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Foreign

CNOOC endorses Tullow’s sale of Ugandan oil stake to Total

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China National Offshore Oil Corporation (CNOOC) has endorsed Tullow’s sale of its stake in Uganda’s oil to Total, a French oil corporation.

Tullow, a British oil corporation, in a statement issued on Thursday said on May 26 it received a notice from CNOOC saying the Chinese oil giant had elected not to exercise its preemption rights.

Tullow on April 23 announced that it had agreed the sale of its assets in Uganda to Total and that CNOOC had rights of preemption to acquire 50 percent of these assets on the same terms and conditions as Total.

Tullow, CNOOC and Total have an equal stake in Uganda’s oil sector.

Tullow said in the statement that following CNOOC‘s no-objection, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020.

The British oil corporation said the 575 million U.S. dollars transaction still remains subject to a number of conditions, including approval by Tullow’s shareholders, and Uganda government tax agreements among others.

(XINHUA)

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Foreign

Suspending oil exports causes Libya 5 bln USD in losses

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The state-owned National Oil Corporation (NOC) of Libya said on Thursday that suspension of oil exports has caused losses of nearly 5 billion U.S. dollars.

“The total losses of the current suspension (of oil exports) have amounted to 4,943,976,768 U.S. dollars, which is impossible to compensate from the reserves,” NOC said in a statement.

“This amount could have covered part of the state’s expenses, such as salaries, fuel subsidies, dealing with a coronavirus pandemic crisis and others,” it added.

NOC called for resuming oil exports “to support the national economy and protect it from consequences of bankruptcy and dependence on foreign banks.”

Tribal leaders in eastern Libya closed oil ports and fields in January, accusing the Tripoli-based UN-backed government of using oil revenues to support armed groups against the east-based army.

Libya’s oil production was estimated at 1.3 million barrels a day before the shutdown.

The east-based army has been attempting to topple the UN-backed government and take over the capital Tripoli by leading a military campaign since April 2019, which killed and injured hundreds of civilians and displaced more than 150,000 others.

(XINHUA)

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