Oil
OPEC Sees Oil Demand Decline Again
DUBAI – Times are gradually changing for OPEC, the Organization of Oil Exporting Countries. Its own surveys show how the global market is shifting as oil production increases.
“They calculate supply from non-OPEC producers and they calculate global demand and as a result they calculate what’s left of the pie for OPEC. The problem is what’s left of the pie is shrinking next year because supply from independent producers – in particular the United States, but not only – is rising faster than demand. So, essentially that leaves less of the market for OPEC next year,” said Richard Swan, editorial director for global oil news at Platts, a leading provider of information on energy, petrochemicals, metals and agriculture.
OPEC estimates demand for its crude oil next year will be around 29.6 million barrels a day. Swan said that’s about one million barrels a day below current production.
“Which is potentially problematic for them. It implies that at current production rates they’re over-supplying the market,” he said.
The most important thing for OPEC, he said, is the price of barrel of oil.
“It’s the single figure which determines their export revenues and actually is the main contributor their budget, so that their governments have revenues in order to spend money. Now the price of oil has been very steady, so they’re happy with that.”
However, Swan said OPEC is not as happy when it looks at other factors.
“If they look without the price, the actual supply/demand fundamentals are not great because they’ve got this boom in production going on coming out of the shale oil in the United States and also the heavy oil sands in Canada and these kinds of developments. They’re going up so fast that they’re talking all of the incremental demand in the market. So that market share argument is not great for OPEC, but as long as the price is over a hundred dollars they’ll be happy,” he said.
Non-OPEC production is expected to significantly rise next year by about 1.2 million barrels a day. The U.S. and Canada will produce nearly all of that. The U.S. oil boom is due in large part to the hydraulic fracturing technique, commonly called fracking. It pumps chemicals underground to fracture shale formations, releasing more natural gas and oil. The industry says the method is safe for the environment, but critics say it can poison drinking water.
Swan said, “I think the U.S. has been at the forefront of fracking in almost every sense. It’s been at the forefront of the technological advances by the oil companies and maybe of the environmental fears being raised by people as well.”
He said there are estimates of significant shale oil resources in many other countries, including Britain, Poland and Ukraine. But some are taking a wait-and-see approach as to how fracking will play out in the U.S.
One country directly affected by increased U.S. oil production is Nigeria, an OPEC member.
“Nigeria has lost its biggest customer – the United States. Almost the first oil that’s being knocked out of the import kind of mix is by the booming shale is the kind of oil that Nigeria produces – this light, sweet crude oil. That’s what’s not required anymore by the refineries down in Texas and Louisiana. So that’s being pushed out. Nigeria is having to find new markets for its oil,” he said.
Algeria, another OPEC member, finds itself in a similar situation, with its market in the U.S. cut in half. China is a potential customer. That’s where fellow OPEC member Angola is doing a lot of business.
“Angola produces quite a mixture of different crudes, but actually it sells more oil historically to Asia, in particular, to China, anyway. So it’s sort of got a better link to consumer countries,” he said.
Swan added that China’s demand for crude oil is not expected to be as huge in 2014 as it was during the last decade. But the Platts’ editorial director for global oil news said it will still lead the way in oil demand.
The increased U.S. production is in line with its long-term strategy to reduce its dependence on foreign oil.
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.
Read Also: Atiku Calls For Rotational Presidency Across Nigeria’s Geopolitical Zones
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.
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.
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.”
Read Also: Offset Accuses Cardi B Of Cheating During Pregnancy
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.
How Family-Owned Businesses Drive Global Economic Success – Halima Dangote
ICPC Tracks 60 Kaduna Projects Worth Billions
BREAKING: Diri Embarks On Annual Vacation
SERAP Urges Tinubu To Probe Missing N57bn In Humanitarian Affairs Ministry, Others
Shell LiveWIRE Initiative Empowers 9,000 Niger Delta Youths With Entrepreneurial Skills
NGO Empowers 180 Market Women In Akwa Ibom
OSSG Raises Alarm Over Murder Plot By APC Chieftain
NCC, SMEDAN, NAICOM, SEC, Others Set for SUPERNEWS SMEs Conf June 13
Sahara’s Tonye Cole resigns from GPHCDA
Oando opens ultra-modern petrol station in Lagos
Niger Delta Avengers: President Buhari Reads riot Act …considers the carrot and stick option
