Oil
OPEC faces multiple challenges
DUBAI – By opting to rollover its current output of 30 million barrels per day (bpd), hopefully until May next, Organisation of Petroleum Exporting Countries (Opec) took the anticipated route last Wednesday.
“We have rolled it over,” veteran Saudi oil Minister Ali al-Naimi, told reporters at the end of three hours of closed-door talks in Vienna. “We are all satisfied.”
Although not much firework was visibly taking place inside the Vienna Opec headquarter conference room, that day last week, yet there are definite hints of skirmishes sooner rather than later.
A number of uncertainties seem challenging the group. Indeed the issue of rising US shale production is now a documented fact, Opec too concedes.
The United States, witnessing a sharp growth in production from shaleformations, is expected to add nearly 1m bpd to its output of oil and other liquid fuels in 2014, after a similar increase this year.
It produced more crude oil than it imported in November for the first time since 1995. More importantly, US oil imports remain well below 2012 levels. Year-to-date, they are 11 per cent lower than in October 2012, as for the first time since the 1990s, the US is producing more crude than it is importing.
In the meantime, the United States, the world’s largest consumer, may also be weaning itself off its addiction to oil. This year consumption of petroleum products is running 10 per cent below its 2005 peak, while cheap and abundant shale gas is finding its way into train and truck engines, making inroads into oil’s monopoly as a transport fuel. Other non-Opec countries like Canada and Brazil are also raising production.
Ominous signs, indeed for the producers’. “The US is saying it will be the largest producer in the world, that it willbecome energy independent and that the world will depend less on imported oil. All of these messages are disturbing,” Mohammad Al Sabban, a senior adviser to the Saudi oil minister from 1986 until last year, was recently quoted as saying.
And although, the Opec Secretary General Abdullah El-Badri refused to be drawn in Vienna in this debate, yet he underlined that Opec would simply wait to see if an oversupply situation occurs. He however, expressed confidence that Opec could accommodate US shale output, currently at 2.7m bpd and set to rise further, yet admitted concerns within, over the rising, non-Opec output.
And in the meantime, Libya is also attempting to get back to normal. Oil minister Abdelbari Al-Arusi said he hoped the country’s production would be back to its normal level of 1.5m bpd within two weeks after plunging to about 250,000 bpd amid deadly fighting between insurgents and the army.
Over the next few months, Opec will also have to surmount the two most important and indeed divisive issues, of the rising output, indeed if and when, from Iraq and Iran.
New output from Iraqi Kurdistan is to add substantially to Iraq’s output. Oil Minister Abdelkarim Al-Luaybi said his country hoped to export 3.4m bpd of crude oil next year, including 400,000 bpd from Iraqi Kurdistan. Compared with 2.38m bpd exports last month, this is a hefty increment of almost 1m bpd.
However, the biggest uncertainty facing the Opec is Iran. Buoyed by an interim agreement on its nuclear programme, Tehran is now aspiring to its raise crude production quickly to 4m bpd from the current 2.7m bpd, if and when if it reaches a deal to roll back sanctions. Speaking in Persian to Iranian journalists before the Vienna meeting, Bijan Zangeneh, Iran’s veteran oil minister, underlined it would increase output even if crude prices tumbled: “Under any circumstances we will reach 4m bpd even if the price of oil falls to $20 per barrel.”
Hamstrung by infrastructure bottlenecks, Iran would need time to ramp back production, if and when the sanctions are lifted, yet it looms large on the horizon.
Opec is faced with headwinds none can deny. And it needs to bring its house in order to ensure a fair return to its priceless asset the black gold.
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.
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.
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