Oil
Ukraine threatens Oil and Gas cut-off in Russia sanctions
Ukraine threatened to block Russian oil and gas supplies to Europe in new sanctions against Vladimir Putin’s government, which it blames for a separatist uprising that has ravaged the country’s east.
Ukraine, which no longer receives any gas from Russia but acts as a conduit for its neighbor’s European customers, is considering a “complete or partial ban on the transit of all resources” across its territory, Prime Minister Arseniy Yatsenyuk told reporters today in Kiev. It may also ban Russian planes from its airspace and cut defense-industry cooperation.
“There’s no doubt that Russia will continue its course — started a decade ago — aimed at banning imports of Ukrainian goods, limiting cooperation with Ukraine, pressure and blackmail,” Yatsenyuk said. “In the most negative scenario for Ukraine, losses during the first year may reach $7 billion, not only because of sanctions but also because of the Kremlin’s aggressive policy.”
The threat may signal that the government in Kiev calculates it has little to lose. It comes a day after Russia banned food imports from Ukraine, the U.S., the European Union and other countries that blame it for stoking the worst geo-political crisis since the Cold War. Gas prices in western Europe rose on the news of Ukraine’s sanctions plan, which would require parliamentary approval.
Less Dependent
Ukraine hasn’t received Russian gas since June 16, when OAO Gazprom cut its supplies in a debt and pricing dispute. The country will manage at least until the end of the year by using stored gas and reducing consumption, according to NAK Naftogaz Ukrainy Chief Executive Officer Andriy Kobolyev.
Ukraine transported 86.1 billion cubic meters of Russian natural gas and 15.6 million metric tons of oil last year, according to a February bond prospectus. That’s about half of Russia’s total gas exports, though less than 7 percent of oil shipments.
“That’s pretty significant, so I can see why prices are going crazy,” Trevor Sikorski, head of gas, coal and carbon at London-based consultants Energy Aspects Ltd., said by phone. “It is quite an extraordinary statement. Western European governments are not going to be happy with this.”
Winter gas in the U.K., Europe’s biggest market, jumped as much as 2.6 percent to 62 pence a therm ($10.42 per million British thermal units), the highest level since July 29 on the ICE Futures Europe exchange. Dutch gas for September rose as much as 2.8 percent to 18.60 euros ($24.91) a megawatt-hour on the Title Transfer Facility hub.
Other Routes
Gazprom stopped shipping gas through Ukraine for almost two weeks in 2009, leaving several EU states including Bulgaria and Slovakia without supplies. It has since worked on other transit routes, including opening Nord Stream, which pumps gas under the North Sea, in 2011. Gazprom also plans to complete the South Stream project with European utilities such as Italy’s Eni SpA (ENI) and France’s Electricite de France SA, by 2019.
Russia also has routes to ship oil that bypass Ukraine, and restrictions would have a bigger effect on Ukraine’s budget and EU countries, Igor Dyomin, a spokesman for Russia’s oil pipeline operator, OAO Transneft, said by phone. The Russian Energy Ministry and Gazprom declined to comment immediately.
Bond Losses
In Washington, the American Petroleum Institute lobbying group said Ukraine’s announcement underscored the need to speed the approval of natural gas exports, even if U.S. gas won’t replace Russian fuel in Europe anytime soon.
“If policy makers act now to allow free trade, U.S. energy exports can further reduce the impact of unrest overseas and limit the influence of foreign suppliers that dominate other markets,” John Felmy, API’s chief economist, said in a statement. The group’s members include Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX)
Ukrainian government bonds extended losses, with the yield on the dollar note maturing in July 2017 climbing 10 basis points to 11.04 percent. The hryvnia also weakened even after the central bank intervened yesterday to stabilize the currency. Russian stocks gained after losses yesterday in the wake of the import ban. The Micex Index (INDEXCF) rose 1.1 percent in Moscow.
Ukrainian lawmakers will vote Aug. 12 on the sanctions bill, which was approved by the cabinet today. It would enable the government to use 26 types of penalties, including possible asset freezes and bans on participation in state asset sales.
The government put forward a list of 65 companies, mostly Russian, and 172 individuals against whom penalties might be imposed. Russia’s Energy Ministry is also assessing risks because of U.S. and EU sanctions and will take measures to bolster the oil and gas industry, including steps related to replacing sanctioned equipment, Energy Minister Alexander Novak said in a statement today.
The one-year Russian restrictions on fish, meat, fruit, vegetables and dairy goods leave a $9.5 billion hole for domestic companies and developing nations such as Brazil to fill. The ban, which also applies to Canada, Australia and Norway, is designed to “protect national interests,” according to a decree signed by Putin.
Latest Fighting
Ukraine’s army engaged separatists, who’ve been pushed back toward the cities of Donetsk and Luhansk by a government offensive in recent weeks, in 44 firefights during the past 24 hours, military spokesman Andriy Lysenko told reporters in Kiev today. Seven soldiers and eight border guards were killed, he said.
Tens of thousands of Donetsk’s 1 million people have fled amid civilian deaths, power cuts and water shortages. The city council has accused both sides of shelling. Lysenko rejected that accusation, saying only the rebels are doing so.
Ukraine is continuing to come under fire from Russian territory, Lysenko said, accusing its neighbor of keeping up a supply of heavy weapons, equipment and vehicles to the rebels.
Putin is facing increasing isolation over the rebellion in Ukraine, which ignited when he annexed Crimea from Ukraine in March. More than four months of fighting has killed almost 1,400 people and displaced hundreds of thousands more, according to United Nations estimates.
-Bloomberg-
Oil
FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
Business
Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
Oil
ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.