Oil
Oil Rises Most Since September on Keystone Pipeline Plan
DUBAI – West Texas Intermediate crude gained the most since September after TransCanada Corp. (TRP) said it will begin operating the southern leg of its Keystone XL pipeline to the Gulf Coast in January.
Prices jumped to a one-month high, narrowing WTI’s discount to Brent. TransCanada plans to start deliveries Jan. 3 to Port Arthur, Texas, via the segment of the Keystone expansion project from Cushing, Oklahoma, according to a government filing yesterday.
Cushing is the delivery point for WTI futures. Crude also rose as U.S. total inventories probably slid for the first time since September last week.“With the pipeline up and running, you are going to see drops in Cushing inventories,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It drives up WTI prices far more than Brent. You are going to see a narrowing of the Brent-WTI differential.”
WTI for January delivery increased $2.22, or 2.4 percent, to settle at $96.04 a barrel on the New York Mercantile Exchange, the biggest advance since Sept. 18 and the highest settlement since Oct. 31. The volume of all futures traded was about 36 percent above the 100-day average at 3:36 p.m.
Crude extended gains after the American Petroleum Institute said U.S. inventories fell 12.4 million barrels last week. Futures advanced $2.74, or 2.9 percent, to $96.56 at 4:36 p.m. in electronic trading. The price was $96.08 before the report was released at 4:30 p.m.
Keystone XL
Brent for January settlement gained $1.17, or 1.1 percent, to $112.62 a barrel on the London-based ICE Futures Europe exchange, the most since Sept. 13. The European benchmark’s premium over WTI narrowed to $16.58 from $17.63 yesterday.
Plans for the southern pipeline segment show it will be able to move 700,000 barrels a day of crude to Port Arthur, home to 6.1 percent of U.S. refining capacity. Motiva Enterprises LLC, Valero Energy Corp. (VLO) and Total SA (FP) all operate plants there.
The proposed northern portion of Keystone XL, which would stretch from Alberta’s oil sands to Nebraska, is being held up because it requires a presidential permit. TransCanada split its original Keystone XL project after President Barack Obama rejected a prior route last year because of fears its path through Nebraska would threaten ecologically sensitive lands.
“The Brent-WTI spread is narrowing quite a bit,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “The Keystone line definitely could impact things.”
U.S. Supplies
Stockpiles at Cushing climbed 25 percent to 40.6 million barrels in the seven weeks ended Nov. 22 as U.S. output reached 8.02 million a day, the most since January 1989, according to the Energy Information Administration, the Energy Department’s statistical arm.
Overall supplies fell 500,000 barrels in the week ended Nov. 29 to 390.9 million barrels, according to a Bloomberg survey before an EIA report tomorrow. They jumped 35.8 million barrels in the previous 10 weeks.
“Expectations that U.S. inventories will draw in tomorrow’s report and the word of the upcoming initiation of the Keystone pipeline to Port Arthur is strengthening WTI verses Brent,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy.
Supplies of distillate fuel, a category that includes diesel and heating oil, dropped by 1.5 million barrels to 109.4 million, the survey showed. That would be the least since May 2008. Gasoline stockpiles probably climbed 1.25 million barrels to 211.9 million.
OPEC Meeting
Futures slid earlier after Iranian Petroleum Minister Bijan Namdar Zanganeh said the country can pump 4 million barrels a day in 2014 if sanctions limiting its exports are lifted. The Persian Gulf country last pumped 4 million barrels a day in 2008, according to Bloomberg estimates.
Iranian oil exports remain curbed by U.S. and European Union restrictions even after a preliminary accord last month with six world powers over its nuclear program. The country currently exports 1.2 million barrels a day, the minister said today in Vienna, where he will attend an OPEC meeting tomorrow.
“There’s been a lot of Iran chatter today, but it’s unlikely their production will rise by much anytime soon,” Kilduff said.
The Organization of Petroleum Exporting Countries will stick with a 30 million-barrel-a-day output limit at the meeting, oil ministers from Iraq, Algeria and Angola said today.
Implied volatility for at-the-money WTI options expiring in January was 17.9 percent, down from 19 percent yesterday, data compiled by Bloomberg showed.
Electronic trading volume on the Nymex was 716,712 contracts as of 4:37 p.m. It totaled 465,507 contracts yesterday, 17 percent below the three-month average. Open interest was 1.63 million contracts.
– 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.