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OPEC cites vaccine as most important factor for oil in 2021 as Nigeria pushes for cuts

Nigeria’s is pushing for Oil countries to maintain current OPEC outputs

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HRH Prince Abdul Aziz Bin Salman, Saudi Arabia’s Minister of Energy and Chairman of the OPEC and non-OPEC Ministerial Meeting, cited the discovery and administration of Covid-19 vaccine as the most important factor for oil in 2021.

He made this remark on Monday, January 4th, 2021, at the 13th OPEC and non-OPEC Ministerial which is taking place via videoconference.

The chairman started by extolling the collaborative effort put together by OPEC+ countries in cutting back oil production and driving up prices to the $50 levels after the drop to under zero recorded earlier in 2020 when leading countries like Saudi Arabia and Russia fell out and dumped supplies in the market.

According to Salman,

I am sure that each of us has a story to tell of the rollercoaster ride we experienced, and of the trials and tribulations we faced in the year just gone. But when the historians look back on this period, we should hope they write a big chapter on the extraordinary successes OPEC+ has achieved in 2020, in the face of such acute adversity.

Not only did we achieve the biggest ever cuts to oil supply, but we also saw those cuts through, in a  disciplined and united manner, that said a lot about the effectiveness of our joint efforts. We achieved the highest levels of conformity in the four years OPEC+ has been operating, and for the first time we agreed a mechanism for compensation to make up for any past slippage from our goals.

He then referred to the arrival of the Covid-19 Vaccine as a light at the end of the tunnel citing the increased economic activity across the world as a major plus for oil demand.

Our collaborative approach has helped us go a long way towards rebalancing global oil markets after the shocks of last year. But now, as we see light at the end of the tunnel, we must – at all costs – avoid the temptation to slacken off our resolve. It is true that the arrival of several vaccines against the COVID-19 virus is a very welcome sign.

I said before that vaccination would be the single most important factor in bringing about economic recovery, leading to a sustained improvement in demand for oil. We have seen this in the general return to optimism within the market since the first vaccines were authorized late last year.

Nigeria Supports Oil Cuts

OPEC and Non-OPEC Members (OPEC+) will continue their meeting on Tuesday to decide production cuts for February 2021 as oil prices climbed to $53 per barrel, the highest since March 2020.

According to Reuters, “Russia and Kazakhstan had backed raising production while Iraq, Nigeria and the United Arab Emirates suggested holding output steady.” The apparent deadlock has pushed discussion further into Tuesday and it is very likely that the oil cartel will reach a decision to keep their production cuts. According to reports, Russia is pushing for an increase of 500,000 bpd.

Oil production cuts are estimated at 7.2 mbpd in January compared to 7.7mbpd in December an increase of 500,000bpd

Reuters also reported that Nigeria’s OPEC Secretary-General Mohammad Barkindo had warned OPEC+ experts of downside risks facing the oil market.

 

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ENERGY

Rivers State seizes oil production site owned by Shell over oil spills

An Oil site operated by Royal Dutch Shell has been seized by Rivers State Government over an incident of oil spills.

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Rivers State Government has seized an oil field, OML 30, owned by Royal Dutch Shell, and sealed off an oil base, Kidney Island, also owned by Shell, over an oil spill incident at the Ejama-Ebubu community during the Nigerian Civil war.

This was disclosed in a statement by the Rivers State Government, reported by Bloomberg on Thursday.

The paper reported that Shell owned 30% of the Oil Mining Lease 11, which Rivers State said it “lawfully purchased through public auction ordered by the court.”

A Federal High Court in 2010 ordered Shell to pay the Community N17 billion for damages caused by the oil spill, but though Shell says the area has been cleaned up, it still denies causing such spillage.

Rivers State also says it has acquired Shell’s stake in the OML11, citing a court approval sanctioning the sale of the assets.

The oil-rich state offered to acquire the oil production site and Kidney island for $150 million. Meanwhile, Shell says that details of the acquisition still remain challenged at a court in Rivers, saying the announcement by Rivers state was “prejudicial,” stating that a transfer of ownership rests with the power of the Minister of State for Petroleum, which is yet to be granted.

Shell says that a court hearing scheduled for January 2021 placed a restraining order on Rivers State before acquiring any of the assets.

What you should know 

  • Recall that it was also reported that officials of Royal Dutch Shell’s Nigerian subsidiary were accused in a report of allegedly masterminding the damage to oil pipelines so as to benefit from the money spent on repairs and clean-up operations.
  • The report, citing research by Dutch environmental group Milleudefensie, revealed that employees of Shell Petroleum Development Company of Nigeria (SPDC) recruited local youths to destroy the pipelines and then hired them back as workers to clean up the oil spill.
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ENERGY

Nigeria’s crude oil export earnings rebounded by 116% in November – OPEC

OPEC said Nigeria’s crude oil export earnings, which had dropped by 77% between January and April 2020, rebounded by 116% in November.

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The Federal Government of Nigeria’s crude oil export earnings rebounded by 116% in November.

The Secretary-General of the Organisation of Petroleum Exporting countries (OPEC), Mohammad Barkindo, disclosed this at the Virtual 19th Nigeria Oil and Gas Conference on Tuesday.

The conference themed: “Fortifying the Nigerian Oil and Gas for Economic Stability and Growth,” elected the Secretary General as its Honorary Chairman.

What they are saying

Commenting on the development, Barkindo said the Nigerian government should be commended for the proactive measures that facilitated the rebound of its crude oil export earnings, when compared to the April 2020 levels. He said:

  • “The government should be applauded for quick and proactive actions. The Nigerian Crude oil export earnings plunged by 77% within three months between January and April 2020, but since then, they have gradually improved and rebounded by 116 per cent in November compared to April 2020 level.
  • “All of us in OPEC family know the enormous debt of gratitude we owe President Buhari for the pivotal role he played in the Declaration of Cooperation (DoC) process between OPEC and non- OPEC producing countries; Particularly, his intervention at the highest level to secure decisions of the 10th extraordinary OPEC and non-OPEC meeting in April 2020; citing that these decisions were taken in response to the unprecedented demand slump resulting from Coronavirus pandemic.”

On the global energy mix, the Secretary-General noted:

  • “The petroleum sector will remain the secure base in meeting global energy needs. We expect oil to retain the largest share of the energy mix throughout the forecast period, providing nearly 28% of global requirements in 2045.”

Barkindo concluded by echoing the importance of stimulating investment in the oil sector in the interest of future energy security and sustainable supply.

  • “Our current assessments show that upstream capital expenditure could fall by more than 30% this year, beyond the losses experienced in 2015 and 2016. OPEC’s World Oil Outlook shows that $12 trillion will be needed between now and 2045 in the upstream, midstream and downstream. We are alarmed at the pull back of capital from the industry.”

What this means

  • The 116% increase in Nigerian crude oil export earnings in November implies increased revenue for the government towards fulfilling its mandates.
  • This is also a good time for the increase considering that the price of Crude oil has increased considerably in recent weeks. Presently, WTI Crude oil sells for $45.66 per barrel, while Brent crude sells for $48.98 per barrel; compared with the average price of $39.79 and $41.49 between January and October for WTI Crude oil and Brent Crude oil respectively.
  • Thus, the increase in oil prices would also improve the monthly federal allocations to states.

What you should know

  • OPEC is a permanent intergovernmental organization of 13 oil-exporting developing nations that coordinates and unifies the petroleum policies of its Member Countries.
  • OPEC was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries namely Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They became the founding members of the organization.
  • These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007), Equatorial Guinea (2017) and Congo (2018).
  • Ecuador withdrew its membership of OPEC effective 1 January 2020. Indonesia suspended its membership in November 2016. Qatar terminated its membership on 1 January 2019.
  • This means that, currently, the Organization has a total of 13 Member Countries.
  • Of the 13 members, Nigeria recorded the 5th highest crude oil production in October according to OPEC’s direct communication data.
  • The OPEC Secretariat is the executive organ of the Organization of the Petroleum Exporting Countries (OPEC). Located in Vienna, it also functions as the Headquarters of the Organization, in accordance with the provisions of the OPEC statute.
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ENERGY

Engineer Sanusi Garba assumes office as Chairman of NERC

The new NERC boss has assumed office today in an investiture event witnessed by other Commissioners of the Commission.

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Engineer Sanusi Garba, today, December 3, 2020, formally assumed office as the Chairman of the Nigerian Electricity Regulatory Commission (NERC).

This is according to the statement issued by the media team of the NERC via the official Twitter handle of the Commission.

Engineer Garba whose appointment was confirmed by the Nigerian Senate on Tuesday will be replacing Professor James Momoh, the outgoing chairman of the Commission.

Speaking at the handover ceremony today, the New Chairman of the Commission recognized the efforts and the hard work of Prof. Momoh and thanked the outgoing chairman for his contributions to the development of the Commission and the sector in general.

However, Professor Momoh on his part pledged his continuous support to the Commission and thanked President Muhammadu Buhari for the opportunity to serve the country.

What you should know

  • The new Chairman of Nigerian Electricity Regulatory Commission (NERC), Engineer Sanusi Garba is a seasoned professional in the Nigerian Energy Supply Industry (NESI), and also a top officer in the Commission.
  • Prior to his nomination as the Chairman of NERC, Garba served as the Vice Chairman of NERC, under the leadership of Prof. Momoh. He also served as the Chief Executive of Katsina Steel Rolling Co. Ltd and the Director (Power) in the Federal Ministry of Power with responsibility for the Generation, Transmission and Distribution aspects of the electricity industry.
  • He also served as Executive Director (Generation) at the Niger Delta Power Holding Co. Ltd during which he provided technical and commercial leadership for the efficient operation of seven (7) NIPP thermal power plants.
  • Engr Garba, who is a seasoned professional has served on many Federal Government Committees including the Presidential Committee on Power Sector Reform (2007/8) and the Presidential Task Force on Power (2009/10).
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