Oil
Brent steady above $113
NEW YORK – Brent crude held above $113 per barrel on Wednesday as heavy fighting in Iraq shut the country’s biggest refinery and led to the withdrawal of staff by foreign oil firms, stoking worries about exports from the key oil producer.
Some oil companies are pulling foreign staff from Iraq, fearing Islamic militants from the north could strike at major oilfields concentrated in the south despite moves by the Baghdad government to tighten security.
“Exports haven’t been affected yet, so the price gain we’ve seen so far is only on speculation that things might deteriorate further and instability will spread to the south of Iraq,” OptionsXpress markets analyst Ben Le Brun told Reuters.
“But as soon as we hear about production affected, then we will start to see the price move up more dramatically. But it’s very hard to put a figure on this,” Le Brun said. “In a worst case scenario, Brent could go above $120 at a minimum.”
Brent lost $0.34 cents to $113.11 per barrel by Wednesday morning, after settling $0.51 cents higher.
US crude gained $0.09 cents to $106.45 per barrel after it ended $0.54 cents lower.
Worries about disruption to Iraq’s supply drove up both benchmarks by more than 4% last week, the biggest weekly jump since July for Brent and since December for US crude.
Iraqi officials say the southern regions that produce some 90% of the country’s oil are completely safe from the Islamic State of Iraq and the Levant, which has seized much of the north in a week as Baghdad’s forces there collapsed.
But the International Energy Agency (IEA) said that Iraq’s target to hit 4 million barrels per day of oil output by the end of the year looks increasingly at risk, just as demand is picking up due to a stronger global economy.
“Within OPEC, Iraq remains the main source of most of the expected capacity growth, but this expansion looks increasingly at risk,” IEA executive director Maria van der Hoeven said.
US crude was supported by data from industry group American Petroleum Institute (API) showing crude stocks fell by 5.7 million barrels last week to 378.2 million, compared with analysts’ expectations for a drop of 650,000 barrels.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 255,000 barrels, API said.
The US Department of Energy’s Energy Information Administration is due to release its closely-watched data at Wednesday morning.
Iran and six world powers re-launched talks on Tuesday to rescue prospects for a deal on Tehran’s nuclear activity by a July deadline.
Britain said on Tuesday it would re-open its embassy in Iran “within months,” after a hiatus of more than two and a half years, a diplomatic breakthrough that underscores the West’s desire to secure Tehran’s help in Iraq and elsewhere in the region.
Oil investors will also keep an eye on the outcome of the Federal Reserve’s policy meeting later in the day.
The Fed is widely expected to shave another $10 billion from its monthly bond purchases, which have supported commodity prices by injecting extra liquidity.
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The Nigerian National Petroleum Company Limited (NNPC) has unveiled a bold strategy to reduce methane emissions in the oil and gas sector by 60% by 2031, with an ultimate goal of achieving net-zero emissions by 2060.
This announcement reinforces Nigeria’s leadership role under the Global Methane Pledge initiative and its commitment to tackling climate change.
The Group Chief Executive Officer of NNPC, Mele Kyari, disclosed these plans during a meeting on Thursday with Robert Leahman, the U.S. State Department’s Global Methane Program Manager, and a delegation from Deloitte.
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The discussions, held at the NNPC Towers in Abuja, focused on collaborative efforts to reduce methane emissions through innovative and sustainable practices.
“Reducing methane emissions is not just an environmental necessity but also a strategic imperative for Nigeria’s energy transition. We are leveraging partnerships to adopt global best practices and innovative solutions,” Kyari stated.
Key among these efforts is a pilot project in the Niger Delta, aimed at establishing emissions baselines, mitigating methane leaks, and promoting sustainable operations across Nigeria’s energy sector.
The project, a partnership between NNPC, Deloitte, and the U.S. Bureau of Energy Resources, will utilize data-driven methodologies to pinpoint and address methane hotspots.
Robert Leahman commended Nigeria’s proactive stance, describing it as a benchmark for other nations on the continent.
“Nigeria’s leadership under the Global Methane Pledge sets a standard for the continent. These initiatives will not only help reduce emissions but also drive sustainable development in the energy sector,” he said.
Kyari highlighted the broader benefits of addressing methane emissions, noting its significance for both environmental protection and economic efficiency.
“This collaboration is a game-changer. By addressing methane leaks, we’re reducing waste, saving costs, and protecting the environment. It’s a win-win for our economy and the planet,” he added.
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.
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.
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